Corning CEO: Data Center Interconnection will Become a Billion Dollar Market

Fiber optic manufacturer Corning is actively expanding into the data center interconnect (DCI) market, and CEO Wendell Weeks revealed to investors during the second quarter earnings conference that this field will continue to create revenue opportunities in the next five years. This strategic shift is mainly driven by the demand for Corning AI products from enterprises and operators.

“Last year, Corning made significant breakthroughs in the DCI field. In addition to obtaining a large contract from Lumen, its new generation AI fiber and cable system also signed multiple undisclosed agreements. We have completed the comprehensive commercialization of this product line and currently have three industry-leading clients adopting this technology, “Weeks said, while cautiously noting that” this is only the beginning of a new market. “He expects DCI’s business to expand rapidly and” bring us a $1 billion business opportunity by the end of 2030.

The Rise of DCI Market

The evolution of the DCI market creates new opportunities for fiber optic cable suppliers such as Corning. Traditional first and second tier operators are providing a combination of dark fiber and high-speed optical circuits for data centers. This market is mainly dominated by two types of service providers: traditional telecommunications companies such as Consolidated, Lumen, Windstream, and professional suppliers such as BIG Fiber. These enterprises are achieving business growth by utilizing existing fiber optic lines that cannot meet the emerging demands of AI.

“After long-term research, we have found that most long-distance fiber optic lines are approaching their maximum data transmission capacity limit, “Weeks pointed out.” This has given rise to a large demand for high bandwidth, low latency links between cities and data center parks, essentially requiring the reconstruction of long-distance networks.”

Innovative technology solutions

Corning’s core innovative product GlassWorks AI ™ Provide a one-stop solution for customized data center products and services, helping operators build high-density fiber infrastructure required for generative AI. Its Contour ™ Flow cables accelerate and simplify data center interconnection deployment by accommodating double fiber within the same diameter.

”When customers evaluated the reconstruction of long-distance networks, they found that implanting more fiber optic cables in a single pipeline could bring significant economic benefits, “Weeks explained.” Therefore, high-density fiber optic cables became the preferred choice. We applied the core technological innovation within the data center to external network challenges and launched a new technology solution to connect the data center campus.”

“These technologies have been validated in the market: Lumen has signed a large contract with Corning to lock in 10% of global fiber optic capacity by 2025-2026 for the construction of a network connecting AI data centers. This protocol covers Lumen’s intercity network in the United States, including diverse routes to over 50 major cities across the country. According to the agreement, Corning’s next-generation AI fiber optic system helps Lumen implant 2-4 times the amount of fiber into existing pipelines, “Weeks emphasized.

AI driven enterprise business

In addition to operators, enterprise business has also become a growth engine for Corning. In the second quarter, the sales of internal fiber optic products in data centers reached a record high of 1.6 billion US dollars, a year-on-year increase of 81%. Weeks attributed the growth to the “Scale out trend in networks – hyper scale customers are expanding GPU clusters by connecting more AI server nodes, in other words, building larger neural networks”.

“Each AI node is interconnected through fiber optic cables, creating a larger demand volume for Corning, “he added. Inside the data center, GlassWorks AI solutions provide high-density cables, Shuffle solutions, optical hardware, and MMC connector components, claiming to achieve 36 times more fiber optic connections than traditional LC connectors in a single rack unit.

New opportunities for vertical expansion

Corning is also targeting the opportunity of “scale up” within data centers: “Oversized customers are developing stronger nodes, expanding from less than 100 GPUs per node to hundreds of GPUs. Traditional AI nodes are limited to a single server, but now they are spanning multiple racks. This evolution has enabled link speeds to reach 100Gbps, significantly increasing fiber optic demand. For example, a single NVIDIA Blackwell platform contains over 70 GPUs and connects more than 1200 links using over 3.2-kilometer copper cables.

With the upgrade of Blackwell nodes, fiber optic cables will gradually replace these copper cables, “Weeks predicts.” As AI nodes integrate more GPUs, fiber optic usage will continue to grow. Simultaneously developing is also the co packaging optics (CPO) technology. Corning collaborates with companies such as Broadcom to promote the integration of optical components and network chips, improving bandwidth density and energy efficiency. CPO technology will activate vertical expansion opportunities, and if the technological breakthrough is successful, its scale can reach 2-3 times that of the existing $2 billion enterprise business, “he said.” We are working with key customers and partners to promote the implementation of this technology. “

Continued growth momentum

Corning’s optical communication business sales in the second quarter increased by 41% year-on-year to $1.6 billion, mainly driven by an 81% growth rate in enterprise AI products. The data center interconnection products are classified as operator business and have been shipped since the first quarter.

Chief Financial Officer Edward Schlesinger pointed out that the 16% year-on-year growth in operator business was due to a dual factor: “Q2 sales doubled compared to Q1, but opportunities are just beginning.” At the same time, the telecommunications industry has already digested the backlog of inventory: “Operators have completed inventory clearance during the pandemic and are now purchasing at the actual deployment speed. In addition, recent public statements have shown that operators plan to expand fiber optic networks, laying the foundation for sustained growth.”

Based on the momentum of the new generation of AI products, Schlesinger expects “strong growth in enterprise business”. The company predicts that its annual sales will reach $4.2 billion, with earnings per share (EPS) ranging from $0.63 to $0.67, and profit growth will continue to be faster than revenue growth. The core sales in the second quarter increased by 12% year-on-year to 4.05 billion US dollars.