Corning’s CEO: Data Center Interconnection will be a $1B opportunity

One of the key innovations Corning is bringing to the DCI table is its GlassWorks AI™ solutions, which it says offer a “one-stop shop” of customized data center products and services to help operators build the dense fiber infrastructure required for generative AI. Corning claims its Contour ™ Flow Cable accelerates and simplifies deployments of interconnected data center networks by fitting double the fiber into existing cable diameters.

“Our customers consider the long-haul rebuilds as they think about that technically and economically, they see great potential economic benefit from fitting more fibers into a given conduit,” Weeks said. “This means they prefer denser fiber optic cables. To create a high-density solution, we applied our core innovations from inside the data center to this outside plan challenge. We introduced this new technology package to connect data center campuses.”

Corning’s platforms are hardly vaporware.

Lumen signed a large cable agreement with Corning that reserves 10% of our global fiber capacity for each of the next two years to facilitate Lumen's build of a new network to interconnect AI-enabled data centers. This is a significant deal for Corning as it will serve Lumen’s U.S. intercity network, which includes diverse routes to more than 50 major cities nationwide.

“We reached an agreement with Lumen Technologies to provide our new Gen AI fiber and cable system that enables Lumen to fit anywhere from 2 to 4x the amount of fiber into their existing conduit, and the agreement reserved 10% of our global fiber capacity for 2025 and 2026,” Weeks said.

AI drives enterprise growth

Carriers aren’t the only group driving growth for Corning, as its enterprise business is also benefiting from new data center fiber builds.

The company’s efforts are paying off. During the second quarter, Corning’s enterprise business, where it reports sales for inside the data center, saw what it said was a record $2 billion in sales last year. It grew enterprise sales 81% year-over-year.

Weeks said the “primary technical driver behind that growth is what the industry calls the scale out of the network, which means that hyperscale customers are scaling out the GPU clusters with more and more connected AI nodes of server rack, or simply put, larger neural networks.”

He added that since “each AI node is connected to the others in the cluster by fiber,” it “creates more volume for Corning.”

Corning is also eying new opportunities inside the data center. Inside the data center, Corning’s GlassWorks AI solutions offer a series of high-density cables, shuffle solutions, optical hardware, and MMC-based connector assemblies that can accommodate what it claims is 36 times more fiber connections within a data center rack unit than a legacy LC connector.

“We also have another significant upside opportunity inside the data center, driven by what the industry calls the scale-up of the network,” Weeks said. “Hyperscalers are creating more capable nodes that move from less than 100 GPUs per node today to hundreds of GPUs per node in the future. Historically, an AI node has been within a single server wrap.”

As hyperscalers scale up, AI nodes are shifting to stretch across multiple server racks, causing the links to reach 100 Gbps, a shift that will require more fiber. For example, a single NVIDIA Blackwell platform has over 70 GPUs with more than 1,200 links using more than 2 miles of copper.

“As Blackwell nodes scale up, fiber connections will eventually replace those 2 miles of copper,” Weeks said. “And those miles will grow over time as more and more GPUs are included in the AI node.”

In tandem with its fiber offerings, Corning sees potential in co-packaged optics. Corning has been involved in the development and advancement of CPO technology, particularly with AI-driven data centers. The company is collaborating with Broadcom and other companies to integrate optical components closer to networking chips, improving bandwidth density and power efficiency.

“CPO is one of the technologies that helps activate the scale-up opportunity for us,” Weeks said. “If we succeed technically, the scale-up chance is 2 to 3x the size of our existing $2 billion enterprise business. And we're working with key customers and partners as we speak on making that future a reality.”

Recipe for growth

Corning’s second-quarter Optical Communications sales grew 41% year-over-year to $1.6 billion. Growth was led by strong adoption of its AI products in the enterprise space, which was up 81% year-over-year.

Corning categorizes its Gen AI products that interconnect data centers in its carrier business, which began shipping in the first quarter.

Edward Schlesinger, Corning’s CFO, noted that the company also saw “strong growth” in its carrier business, which was up 16% year-over-year due to two factors.

He noted that while “We doubled sales from first quarter levels in the second quarter, we're still in the very beginning of this opportunity.”

Another key factor is that the telecom carrier provider industry has overcome the inventory glut that hampered the cabling and networking vendor industry in previous quarters. “Carriers have completed drawing down inventory they built during the pandemic, and they are now purchasing at their rate of deployment,” he said. “This also contributed to year-over-year sales growth in our carrier business. And as noted in recent public statements, carriers are planning to expand their fiber networks going forward, which sets the stage for additional growth.”

Driven by new Gen AI products, Schlesinger said, “We also anticipate continued strong growth in our enterprise business.”

Coming off the second quarter, Corning has forecast double-digit year-over-year sales and earnings growth, with sales of $4.2 billion and profit again growing faster than sales, with earnings per share (EPS) in the range of $0.63 to $0.67.

Corning reported that overall core sales were up 12% year over year to $4.05 billion.

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