Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mark Sue - RBC Capital Markets.
Mark Sue - RBC Capital Markets
On Display glass, if the inventory supplies are less than a year ago and demand is greater than a year ago, shouldn't we see magnified improvements as we move into 3Q and then an increase in 4Q since there is still some catch up going on?
Aside from the macro, is it set assembly data that's kind of giving you pause or any other thoughts aside from the macro picture for your conservatism?
Jim Flaws
Well, we feel comfortable about where inventories were at the end of Q2. We expect them to build in Q3 and to get up, as I said, to about 800 million square feet. That's down from where it was at the end of Q3 last year, which we had thought was excessive, but we think that's an appropriate level heading into what will be the Q4 demand.
I hesitate to replay to the word conservatism. In our models and our tracking of demand, we think the inventory level is appropriate - not being overbuilt and not underbuilt, either.
Wendell Weeks
And I'd add to that that there's always room for some caution here because though we feel really good about the end market, it's always possible for different players in the supply chain to make a judgment on how much inventory they want to carry and what their confidence is for the coming quarter.
So that's why before we make some decisions about restarting even more capacity we want to get a little bit better insight into those plans and a little more data [under our belt about the end market.]
Mark Sue - RBC Capital Markets
And, Jim, just as a follow up, can we assume a steady level of gross margin improvements as we see growth in Display glass for the balance of the year? I think at this revenue point and with stable pricing it was kind of near 48% in the past. Is that kind of within the ballpark that we should think about?
Jim Flaws
I'm sorry; you broke up so I couldn't hear the question.
Mark Sue - RBC Capital Markets
Sure. Can we assume a steady level of gross margin improvements as we see growth of Display glass for the balance of the year around this revenue point and with stable pricing? Can we assume right around 48% gross margins? Is that reasonable? We saw this in the past.
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