The company that once made glass bulbs for Thomas Edison lost money on fiber-optic cables for nearly 20 years.
Corning’s cable is in sudden demand because of physics: data can be sent much faster and with less power using lightNow, in the global race to build enough computing power for a future driven by artificial intelligence, Corning’s cables have become the connector of choice. The Cinderella story for the relatively unassuming but high-tech component has been a boon for the 175-year-old company, and a lesson in how long it can be willing to lose money on a new idea.
Corning stock is hovering around its all-time high, boosted by a recently announced $6 billion deal with Meta to supply fiber-optic cables for the company’s fast-growing AI data centers. Corning said it is in talks with others for more such deals. It’s also working on what could be its next big thing — fiber that goes inside servers, rather than connecting them to each other.
Clearer than crystalCorning’s cable suddenly became in demand because of physics: data could be sent much faster and with less energy using light (made of photons) than electricity (made of electrons). The cable often consists of dozens or hundreds of flexible, ultrathin glass fibers that carry the signal.
Until recently, fiber optics was primarily used to connect the nodes of the Internet—sometimes underground and spanning thousands of miles under the waves.
“Transmitting data with photons is three times more efficient than with electrons, even over short distances,” says Wendell Weeks, Corning’s chief executive since 2005, from the fiber-optics division. “And over long distances, it’s like 20 times that.”
About half of Corning’s manufacturing remains in the U.S., an achievement given how many others have offshored high-tech manufacturing. At a factory in North Carolina, it spins strands of glass as thin as human hair, yet 30 miles long. They are so transparent, if you filled an ocean with them, you could see straight down.
Corning’s success in this space isn’t guaranteed, said Mike O’Day, who heads its fiber business. Until recently, the company was still making a product that hadn’t changed much since its introduction in 1970.
In 2018, Weeks and O’Day visited a data center in Dallas owned by Meta, then known as Facebook. They were surprised by the demand for fiber-optic cabling to connect all the servers inside that massive warehouse. Facebook was using a mix of copper cables and existing fiber optics, but both were deemed unsuitable for the job.
That prompted Corning’s engineers to make their wires thinner, but stronger, so they could withstand tighter bends, said Claudio Mazzali, Corning’s head of research.
Five years later, ChatGPT debuted, and demand for fiber-powered data centers exploded.
“We’re thankful we made the trip in 2018 and thankful we made the bet,” O’Day said At the time, they had no idea whether it would be a good investment or a bad one, he adds.
‘Corning Way’What has made Corning’s fiber reinvention possible is that the company outsources almost nothing, Mazzali said. It even designs the machines used to make its optical fibers and cables.
Weeks says it’s part of the “Corning Way.” That self-preservation also applies to the workforce, the CEO said. When the company changed direction, it rehired engineers rather than laying them off, so they accumulated decades of expertise across a variety of projects. “The things that our engineers do, you can’t learn from a textbook,” Weeks says
After the pandemic began, Corning endured six consecutive quarters of shrinking revenue, its longest decline since the 2001 telecom crash. Instead of laying off workers and shrinking factories, the company gave employees the option to take some of their compensation in stock.
“We were probably carrying 4,000 to 5,000 more workers than our revenue could support,” Weeks says. Corning currently employs approximately 56,000 people worldwide.
Now that demand for fiber is growing, the company needs all that staff and capacity – and more.
supply and demandCorning is the largest fiber-optics manufacturer and has the lion’s share of the North American market. Fiber for data centers is the fastest-growing segment of Corning’s revenue, O’Day says. Analysts say its continued fortunes depend on big tech companies continuing to build at their projected rates.
William Kerwin, a senior equity analyst at Morningstar, said, “At the level Corning’s stock is at today, everything is going well and nothing is going wrong.
ON in the data center As a provider, Corning is already selling what it can. “I think demand for Corning’s fiber is going to outstrip supply for the foreseeable future,” Carwin said. “It’s safe to say that if they can produce more, they can run more.” Another reason: Fiber-optic installations face labor shortages.
Whether or not the AI industry meets its growth goals, both established and emerging businesses will continue to look to optical fiber of the caliber coming from Corning and a handful of global competitors. And Corning has already lined up its next growth business: Nvidia is exploring servers that directly incorporate the glassmaker’s “co-packaged” optics.
It took Corning nearly half a century to build a billion miles of optical fiber. The second billion took eight years, reaching a milestone last year. The next billion will come much sooner.
In part, that’s because more fiber is entering dense networks within data centers, soon enough to overtake long-haul businesses in terms of delivery miles, O’Day said. And then there’s the fiber that goes inside the computer.
Although Weeks is optimistic about the relationship with Nvidia, he says he has yet to be invited to Nvidia CEO Jensen Huang’s famous fried-chicken-and-beer summit. Developing co-packaged optics requires patience and capital, Weeks says, just like Corning’s past innovations.
“Once we actually deliver, I guess you’ll get an invitation for beer and chicken,” Weeks said.
Write to Christopher Mims christopher.mims@wsj.com
