After U.S. stocks opened on Tuesday, Corning, which is famous for supplying panel glass to Apple, rose more than 10%.Continue to reach new highs since nearly 2000. According to the news, the company signed a data center fiber optic cable supply agreement with technology giant Meta, with the amount reaching up to US$6 billion.
(Corning daily chart, source: TradingView)
According to the announcement, Corning will supply Meta with its latest optical fiber, cable and interconnect solutions. To support this collaboration,Corning will also make a "significant capacity expansion" at its North Carolina plant, Meta will become the plant's main customer.
(Source: Corning official website)
Meta's two major data centers currently under construction are the 1-GW Prometheus site in Ohio and the 5-GW Hyperion site in Louisiana. Under the new agreement, both will use Corning's fiber optic cables.
According to Wendell Weeks, Chairman and CEO of Corning Incorporated, upon completion of the expansion projectNorth Carolina plant to become 'world's largest fiber optic cable factory', to meet the growing needs of technology companies such as Meta, NVIDIA, Google, Microsoft, and OpenAI.
Weeks also said that almost all customers have called to ask "how to get more goods" and said that hyperscale cloud service providers will become the company's largest customers next year.
According to Corning's financial report, the company's optical communications business revenue jumped 33% to US$1.652 billion in the third quarter of last year, while overall sales increased by 14% to US$4.272 billion. Corning also stated in its financial report that enterprise sales of its optical communications business increased by 58% year-on-year in the third quarter, mainly due to the continued strong demand for Corning's new generation of AI products. According to the schedule, Corning will release its latest earnings report after the market closes on Wednesday.
Mike O’Day, head of Corning’s fiber optic business, also emphasized that meeting demand is the company’s main challenge currently.Meta's Louisiana data center alone requires 8 million miles of fiber.
The company has now also set its sights on the exhibition space inside the server. Wicks noted that while copper cables still dominate chip interconnects inside servers, the shift to fiber optics will be "imperative" as the number of processors climbs into the hundreds per rack. At connections of this scale, fiber optics "becomes more affordable and energy efficient," he stressed.
What is very interesting is that Wicks revealed that the company developed new products for data centers as early as 5 years ago, even before ChatGPT was publicly unveiled. The opportunity behind it came from a conversation he had with an unnamed "artificial intelligence leader."
Weeks recalled that the other party asserted at the time that it would require a lot of computing power and explained what the Scaling Law of large models was.
Witnesses of the Internet Bubble
Although Corning has appeared to investors more as an "Apple supplier" in the past decade or so, this 175-year-old glass manufacturer is also the originator of the optical communications industry.
In 1970, four years after the Chinese scientist Kao Kun published a paper predicting the emergence of "fiber optic communications",Corning unveils world's first optical fiber with practical attenuation.
During the Internet boom in the 1990s, based on expectations of a surge in communication demand,Corning's stock price roughly increased ninefold from early 1997 to September 2000, before losing 90% of its value in the market crash.. Because of this, after experiencing a doubling of prices in the past year, Corning is still just shy of a record high.
(Corning monthly chart, source: TradingView)
When talking about the risk of a possible slowdown in AI investment, Wicks said fiber demand is growing at an average of 7% per year, so the company's products "will find good places to go." In addition, the company's product line also has some businesses that are more stable and have higher cash flow.
Meta Marshall, an analyst at Morgan Stanley who tracks network equipment, also said that fiber demand may fluctuate, but Corning will likely be able to handle it. "There will still be demand for TVs, cellphones, cars, car glass and small bottles of medicine," Marshall said.