Corning’s CEO maintains the view that optical scale-up will ramp in 2028
Key Highlights
- CEO Wendell Weeks reaffirmed Corning’s forecast that optical scale-up will begin accelerating in 2028.
- Corning estimates fully optical scale-up could require 160 fibers per GPU, ten times the current level.
- Agreements with AT&T, Verizon and Zayo support broadband and data center interconnect network expansions.
- Third-quarter Optical Communications sales rose 44% to $2.38 billion, while Enterprise sales grew 84%.
- Corning expects fourth-quarter core sales of $5.2 billion to $5.3 billion and core EPS of $0.96 to $1.00.
Corning is confident that it is positioned to accommodate the emerging scale-up opportunity in the AI data center market segment.
Scale-up in modern AI data centers links dozens to hundreds of processors (GPUs/XPUs) inside a single server, chassis, or rack so the entire group appears to software as one single, logical compute domain.
At its investor day event in May, Corning forecasts the optical scale-up to begin to accelerate in 2028.
Wendell Weeks, Corning's CEO, reiterated its optical scale-up forecast to investors during its third-quarter earnings call, saying it expects “optical scale-up to begin to accelerate in 2028.”
“We continue to believe that strongly. We're on the inside of that ecosystem,” he said. “I know people hear different things about different components, and will this be delayed or will that be delayed. This is just classic technology development.”
Today, all current scale-up architectures are copper. Weeks noted that Corning estimates that if all the scale-up were optical, it would increase to 160 fibers per GPU—a 10-fold increase.
“The question then becomes how fast is that going to happen, and what percent of the GPUs will be connected by optical scale-up?” Weeks said. “And given its strong leverage on our financials because, obviously, a 10x increase in demand for GPU would have a significant impact on our financials given our position, this is what drives the quite appropriate fascination with timing.”
DCI opportunities ramp
Driven by growth in data center interconnect, Corning’s third-quarter Carrier segment sales grew 4% year-over-year.
During the quarter, Corning signed long-term customer agreements with AT&T, Verizon and Zayo to deliver fiber and connectivity solutions to support their network expansions across broadband and data center interconnect (DCI) applications.
Each of these deals is far-reaching.
AT&T, which continued to see fiber-to-the-home (FTTH) growth in the third quarter, will use its expanded agreement with Corning to meet its goal to provide broadband services to 60 million Americans by the end of 2030.
Verizon’s multi-billion-dollar agreement with Corning secures over 80 million miles of high-density optical fiber through 2032 to support broadband and AI infrastructure. It also enables Verizon to deploy more fiber within existing conduits, increasing network capacity and supporting the convergence of mobile and broadband services.
No less significant is Zayo, which has been aggressively expanding its network to serve carriers, enterprises, and increasingly data center providers. Its agreement with Corning enables it to pursue its expanded plan to add 15,000 new route miles by 2030.
Edward Schlesinger, CFO of Corning, said that its latest customer wins illustrate the company’s thesis that it has plenty of staying power in the service provider industry and the emerging DCI segment.
“Collectively, these agreements serve as an excellent proof point for our long-term opportunity in Carrier and give us confidence that our opportunity in DCI is bigger than the $1 billion target we've previously communicated,” he said. “Data center interconnect is the bigger opportunity in the Carrier space. I would expect that to drive nice growth as we go into next year and then beyond that.”
He added that “we originally thought that DCI could be a $1 billion business by the end of the decade.”
Optical takes revenue lead
Corning’s third-quarter revenues were led by Optical Communications, with third-quarter sales up 44% to $2.38 billion.
Net income was $532 million, up 80% year over year, delivering what the company said was “record profitability.”
Enterprise Networks grew sales 84%, with Gen AI product sales growing more than 100% year over year.
Schlesinger said, “As Optical Communications penetrates the scale-up portion of the network, our revenue opportunity will increase dramatically.”
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Here’s other news on Corning:
· Corning’s CEO says data center scale-up, scale-out represents a $10B revenue stream
· Corning’s Q1 $1.8B optical sales get boosted from Gen AI
· Corning’s CEO says there’s enough fiber in the world to meet demand
· Corning sees growth opportunities in the hyperscaler data center’s scale-up segment
· Corning’s CEO: Data Center Interconnection will be a $1B opportunity
Likewise, Enterprise grew sales 84% year over year, with Gen AI product sales growing more than 100% year over year and outpacing GPU unit growth.
Schlesinger said Enterprise growth was “driven by the rapid and broader adoption of our innovations and enabled by our steady capacity additions.”
“At the launch of Springboard, our Enterprise sales run rate was $1.4 billion,” he said. “Since that time, we've quadrupled Enterprise sales to a $6 billion run rate. As Optical penetrates the scale-up portion of the network, our revenue opportunity will increase dramatically.”
Corning grew overall third-quarter core sales 19% year over year to $5.08 billion – which it said is the strongest growth since the launch of its Springboard program.
Looking at the fourth quarter, Corning expects core sales to grow about 19% year over year to a range of $5.2 billion to $5.3 billion and core earnings per share (EPS) to grow about 36% year over year to a range of $0.96 to $1.00.
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About the Author
Sean BuckleySean Buckley
Sean is the Editor-in-Chief of Lightwave. He establishes and executes Lightwave's editorial strategy across its website, email newsletters, events, and other information products. Before coming to Lightwave in July 2023, he served as editor of Broadband Communities. Earlier, he served as senior editor of FierceTelecom and the editor of the former Telecommunications Magazine. He got his start in the optical industry in 1998 when he became the editor of enterprise and optical networks at Information Gatekeepers. He has a BA in English from the University of Massachusetts, Boston, and lives in Dracut, Mass, with his wife, two sons, and his cat, Dove.
