Corning’s CEO says data center scale-up, scale-out represents a $10B revenue stream
Key Highlights
- Corning aims to generate $10 billion in revenue from data center optical scale-up by 2030, focusing on both scale-out and scale-up networks.
- The transition from copper to optical fiber is accelerating, with optical ports beginning to penetrate traditional copper-based scale-up networks.
- Strategic partnerships with companies like Broadcom, Amazon, and NVIDIA bolster Corning’s position in co-packaged and near-package optics solutions.
- Industry forecasts support optical connectivity as the preferred choice for high-bandwidth, reliable data center networks, especially in AI applications.
- Corning’s sales growth is driven by strong demand in optical communications and enterprise sectors, with a focus on AI data center infrastructure expansion.
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Corning has set its sights on the data center scale-up opportunity to enhance its new Photonics Market-Access Platform (MAP) in its Springboard plan, expecting the scale-up and scale-out opportunity to become a $10 billion revenue stream by 2030.
In its Enterprise MAP, Corning expects to capture strong growth as AI data center cluster size increases in scale–out and optical scale-up takes hold.
While current data centers leverage copper wiring, optical fiber is starting to have a presence in scale-up networks.
Wendell Weeks, CEO of Corning, told investors during its second-quarter earnings call that he sees Corning playing a big role in scale-up as the transition from copper to optical fiber gains momentum.
“Today, the scale-up network is 100% copper, but optical is beginning to penetrate the scale-up network,” he said. “This adds an entirely new optical network. And while the timing of adoption and penetration are very difficult to predict, the size of the opportunity for an increase in optical content is quite large.”
What is data center scale-up?
Data center scale-up focuses on increasing computational power, memory, and processing capacity within a single server rack, node, or pod rather than adding separate independent machines across a network.
Optical scale-up momentum
While it is still early, the foundation for optical scale-up is in place.
Corning pointed to NVIDIA’s recent announcement of a Vera Rubin Ultra configuration, which will scale up to 576 GPUs in 8 separate racks, is evidence of this trend. Each rack will have 72 Rubin Ultra GPUs, which are interconnected with copper and then extended rack-to-rack with direct optical connections.
The silicon vendor’s recent move reflects what Corning calls a transition step to optical that is effectively a hybrid system approach to scale up.
“Optical is now playing a role,” Weeks said. “The percentage of optical ports has not yet been announced publicly. What has been announced is the scale-out bandwidth of 1.6 Tbps and the scale-up bandwidth for the individual GPU, which will be 14.4 terabits per second.”
As it pursues satisfying growing scale-up data center optical demands, Corning will also focus on bringing optics “inside the box” to enable new technologies for co-packaged optics (CPO) and near-package optics (NPO).
Corning has been establishing its position in CPO via partnerships with other optical vendors such as Broadcom. The company is a qualified supplier of the optical infrastructure necessary to bring fibers to Broadcom’s Bailly, a CPO-based 51.2 Tbps Ethernet switch.
Today, light creation, modulation, and delivery of the encoded optical signal move “inside the box” at the silicon photonic optical engine. Looking forward, Corning notes that all the passive photonics move and manage the light inside the box.
“Essentially, new inside-the-box optical functions create the opportunity for Corning passive photonics to manage light. Historically, we have had no inside-the-box content,” Weeks said. “What's happening here is that because of the potential for improvement of latency, faceplate density, power and reliability, customers are looking for the opportunity to move away from pluggables and toward co-packaged optics and near-package optics.”
Industry research firms like LightCounting support Corning’s scale-up thesis.
Driven by scale-up networks in AI clusters, the research firm noted that optical connectivity in AI scale-up networks will fuel the market's expansion between 2026-2030.
“We expect that CPO will emerge as the best option for connectivity in scale-up networks, because of higher bandwidth density and reliability,” LightCounting said.
Enterprise, optical lead revenues
Driven by strong Optical Communications and Enterprise sales, Corning’s year-over-year sales grew 17% to $4.74 billion.
Optical Communications increased sales by 32% to $2.07 billion, delivering record profitability in the second quarter with NPAT as a percent of sales of 21%.
Likewise, Enterprise sales grew 65% year-over-year, driven by continued strong demand for its Gen AI innovations, as seen in new deals with both Amazon and NVIDIA.
Amazon announced a multiyear, multibillion-dollar agreement under which Corning will supply the optical fiber, cable, and connectivity solutions that power Amazon's expanding data center infrastructure across the U.S.
Also, NVIDIA and Corning announced a long-term partnership in which Corning will expand its U.S.-based optical connectivity manufacturing capacity by 10x and expand its U.S. fiber production capacity by more than 50% to meet the accelerating demand driven by AI factory buildouts.
“The portion of enterprise sales related to AI data centers nearly doubled in the quarter,” said Edward Schlesinger, CFO of Corning.
Meanwhile, Carrier sales grew 1% year-over-year in the second quarter.
Schlesinger said that it “expects to grow sales mid-single digits driven by fiber-to-the-home deployments and data center interconnect.”
Looking at the third quarter, Corning expects sales to grow about 16% year-over-year to a range of $4.9 billion to $5 billion and core earnings per share to grow approximately 28% year-over-year to a range of $0.85 to $0.89.
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About the Author
Sean Buckley
Sean is responsible for establishing and executing the editorial strategy of Lightwave across its website, email newsletters, events, and other information products.
