Corning’s AI push bolsters fourth quarter Optical Communications results
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Also, here's coverage of other key stories on Corning:
· Corning’s Q3 optical revenues rise to $1.2 billion on carrier, AI opportunities
· AT&T inks multi-year fiber agreement with Corning to address BEAD requirements
· Backed by AT&T demand, Corning to build optical cable manufacturing plant in Arizona
· Corning secures generative AI and fiber deal with Lumen on strong Q2 results
Corning’s bets on the emerging AI space continue to pay off. The fiber vendor continues to see growth in its Optical Communications enterprise segment, a trend that continued into the fourth quarter.
Due to strong sales in Optical Communications and record sales in the Enterprise portion of the business, Corning reported that total fourth-quarter sales were 1.4 billion dollars, up 51 percent yearly.
Likewise, full-year sales were $4.66 billion, up 16 percent, driven by the continued adoption of Corning’s new Gen AI products introduced in June.
For the fourth quarter, net income for the Optical Communications segment grew 120% year-over-year to $194 million.
Speaking to investors during its fourth-quarter earnings call, Wendell Weeks, CEO of Corning it sees future potential in serving customers supporting AI with its new product lines
“Overall, strong customer response to our new products drove sales of $1.4 billion in Optical Communications in the fourth quarter, reflecting 51% year-over-year growth,” he said. “And we expect continued growing demand in Optical in 2025 and beyond.”
Ramping AI
A big focus for Corning is supporting the Artificial Intelligence (AI) movement with fiber products.
Since it introduced generative AI products in June 2024, demand has grown each quarter for the remainder of 2024.
The fiber vendor has introduced a new product that helps its customers build a new network to interconnect AI-enabled data centers between cities.
Sales in the Enterprise Networks portion of Corning’s Optical Communications segment were $686 million, growing 93% year-over-year in the fourth quarter and 49% for the full year to a record $2 billion.
Weeks said, “that growth reflects the Gen AI opportunity inside the data center.”
One of the big proof points that Corning got for its AI was an agreement with Lumen, which reserves 10% of global fiber capacity for 2025 and 2026. Lumen has begun deploying new data center interconnect products.
Corning is providing its "generative AI" cable which is designed to increase the amount of data that can be transmitted through existing conduits compared to older fiber technology. It has also introduced a set of innovations to help our customers build a new network to interconnect AI-enabled data centers between the cities.
“As part of an agreement with Lumen Technologies, we launched the first outside plant deployment of Corning's new Gen AI fiber and cable system, enabling Lumen to fit anywhere from 2 to 4x the amount of fiber into their existing conduit,” Weeks said. “And just this month, we started shipping, and Lumen has begun deploying our new data center interconnect products.”
Providers’ inventory thawing out
As traditional service providers have worked through their inventory glut, Corning is seeing that Carrier Network sales are starting to rise again.
Corning reported that Carrier Network sales grew YoY in the fourth quarter. Taking into consideration carrier customer conversations and public announcements, the company expects continued carrier growth expected in 2025 and beyond.
The company said that it expects carrier deployments to increase in 2025 and the growing demand for connectivity products for generative AI.
“We see carrier growing year-over-year as their deployment rates have -- as their purchases from us are now approaching their deployment rates,” Weeks said.
He added that it is seeing the inventory freeze starting to thaw out.
“As part of our cyclical trend there, what we said is that the carriers have overdone inventory relative to deployment, and those two things would come into line, and then we'd start to see recovery,” Weeks said. “We see the beginning of that, right, but we'd like to see more.”
Another key question for Corning is what effect the Broadband Equity, Access, and Deployment (BEAD) program will have, given the new presidential administration. Weeks said that while it sees potential, it won’t have a material impact until probably next year.
“We are starting to see the earliest trickles, but not enough for us to notice the size and scale of our numbers,” he said. “And yes, what we're seeing supports our view of the Total addressable market (TAM). I wouldn't take it as necessarily reinforcing nor say that it would all accelerate our view that this would begin to make a difference anytime between now and 2026.”
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.