Corning glass output hurt by Taiwan plant incident

* Power disruption at Taichung plant hurt glass production

* Q4 glass output now seen flat to down

* Without disruption, volume was seen up as much as 5 pct

NEW YORK, Oct 19 - Specialty glass maker Corning Inc <GLW.N> said on Monday a weekend power disruption at its plant in Taichung, Taiwan, will hurt glass production in the fourth quarter.

Corning, the largest maker of glass for liquid crystal display screens, said the event affected some of its glass- making operations and that it is still assessing the full affect of the disruption.

As a result, it now sees volume in the fourth-quarter at flat to down slightly from the third quarter.

Without the disruption, glass volume would have increased by as much as 5 percent, Corning said.

"The majority of our Taichung glass production continues to operate normally," said Corning chief financial officer James Flaws in a statement. "However, the power disruption caused the shutdown of several of our glass melting tanks.

"We are in the process of determining how much glass melting capacity was affected, the time to repair the tanks and the impact on our glass volume available for customers."

Goldman Sachs analyst Simona Jankowski suggested in a note to clients that the event affected about 7 percent of Corning's combined wholly owned glass capacity.

Since late May, the company has been more and more optimistic about glass demand this year due to signs of recovery in corporate spending on technology and robust growth in sales of LCD TVs.

But this represents the second operational setback in as many months for Corning. Last month, it reported that an earthquake in Japan in August forced Corning to shut down a factory in Shizuoka.

Analyst were split on the implications of the disruption to the plant, which opened in 2006 and manufactures glass that is often used by its customers in LCD TVs. Some noted that gross margin may be hurt by the potential incremental start up costs, while others noted the outage could affect supply and help prop up prices.

Jankowski, in a client note, increased the firm's first quarter glass price assumption to a decline of 2 percent from a declined of 4 percent, citing "the likelihood that tighter near-term supply-demand will cause a 'softer landing' in the LCD cycle, which we still expect to peak in the fourth quarter."

Corning shares rose 17 cents to close at $15.54 on the New York Stock Exchange. (Reporting by Franklin Paul; editing by Gerald E. McCormick and Andre Grenon)