Corning and Lumen Reach Supply Agreement on Next-Generation Fiber-Optic Cable to Support Data Center AI Demands

Rhea-AI Summary

Lumen Technologies (NYSE: LUMN) has announced a significant agreement with Corning Incorporated (NYSE: GLW) to secure a substantial supply of next-generation optical cable. This deal will more than double Lumen's U.S. intercity fiber miles, addressing the growing demand for AI workloads and high-bandwidth applications in cloud data centers.

Key points of the agreement include:

• Lumen reserves 10% of Corning's global fiber capacity for each of the next two years
• The agreement is Lumen's largest cable purchase to date
• It will enable Lumen to meet the network infrastructure needs of major data center operators, including Microsoft
• The new fiber-dense cable will support the rapid advancement of generative AI, which requires at least 10 times more fiber connections within data centers

Positive

• Agreement secures 10% of Corning's global fiber capacity for Lumen over the next two years
• Lumen's U.S. intercity fiber miles will more than double
• Partnership positions Lumen as a preferred partner for AI-driven network infrastructure
• Agreement enables Lumen to meet growing demand from major data center operators like Microsoft

Negative

• None.

Insights

Financial Analyst

This agreement between Lumen Technologies and Corning Incorporated represents a significant development in the telecommunications infrastructure sector, particularly in light of the growing demands of AI and data-intensive applications. Here are the key financial implications:

• Revenue Growth Potential: By securing 10% of Corning's global fiber capacity for the next two years, Lumen positions itself as a preferred partner for major data center operators. This could lead to substantial revenue growth as demand for high-capacity networks continues to surge.
• Capital Expenditure: While specific financial figures aren't disclosed, this agreement likely represents a significant capital investment for Lumen. Investors should monitor how this impacts the company's balance sheet and cash flow in the short term.
• Competitive Advantage: Doubling Lumen's intercity fiber miles gives the company a strategic edge in the rapidly evolving AI infrastructure market. This could potentially lead to increased market share and improved long-term profitability.
• Supply Chain Security: In an era of supply chain disruptions, securing a substantial portion of Corning's fiber capacity provides Lumen with a reliable supply of critical infrastructure components, potentially mitigating future operational risks.

Overall, while this agreement represents a substantial investment, it positions Lumen favorably in a high-growth market segment, potentially leading to improved financial performance in the medium to long term.

Tech Expert

This partnership between Lumen and Corning marks a pivotal moment in the evolution of network infrastructure to support AI-driven technologies. Let's break down the technical implications:

• Fiber Density: Corning's next-generation optical cable allows for 2-4 times more fiber in existing conduits. This quantum leap in fiber density is important for handling the exponential growth in data traffic generated by AI applications.
• Network Capacity: By more than doubling its intercity fiber miles, Lumen is significantly expanding its network backbone. This increased capacity is essential to support the 10x increase in fiber connections required within and between AI-enabled data centers.
• Low Latency: Lumen's emphasis on ultra-low-loss intercity fiber suggests a focus on minimizing signal degradation over long distances. This is critical for AI applications that require real-time data processing and transmission.
• Network Flexibility: Lumen's multi-conduit system allows for rapid deployment of new fiber technologies. This adaptability is important in the fast-evolving landscape of AI and high-bandwidth applications.
• Digital Platform: Lumen's development of a digital platform for cloud-like consumption of network services, including the Private Connectivity Fabric℠, indicates a shift towards more flexible, scalable network architectures that can better support AI workloads.

This technological leap positions Lumen at the forefront of AI-ready network infrastructure, potentially enabling the next wave of AI innovations and applications.

Market Research Analyst

This partnership between Lumen and Corning is a clear response to the rapidly evolving market dynamics driven by AI adoption. Let's examine the market implications:

• AI Infrastructure Demand: The agreement underscores the explosive growth in demand for AI-capable network infrastructure. This trend is likely to accelerate as more companies integrate AI into their operations.
• Market Positioning: By securing a significant portion of Corning's fiber capacity, Lumen is positioning itself as a key player in the AI infrastructure market. This could lead to increased market share and potentially higher valuation multiples.
• Competitive Landscape: This move may pressure other telecom companies to make similar investments to remain competitive in the AI era. We could see a wave of infrastructure upgrades across the industry.
• Customer Acquisition: The partnership with Microsoft, mentioned in the announcement, suggests that Lumen is already leveraging this investment to secure high-profile customers. This could lead to a virtuous cycle of attracting more major tech companies.
• Market Expansion: The significant increase in network capacity positions Lumen to tap into new market segments beyond traditional telecom services, potentially including edge computing, IoT and advanced cloud services.

Overall, this partnership reflects a broader market shift towards AI-centric infrastructure, with potential ripple effects across multiple technology sectors. It's a strategic move that could reshape the competitive landscape in the telecom and cloud computing industries.

Agreement reserves 10% of Corning’s global fiber capacity for each of the next two years to interconnect AI-enabled data centers

Agreement will more than double Lumen’s intercity network miles to unlock the next phases and capabilities of AI for cloud data centers, enterprises, and public agencies

CORNING, N.Y. & DENVER--(BUSINESS WIRE)-- Lumen Technologies (NYSE: LUMN) today announced an agreement with Corning Incorporated (NYSE: GLW) for a substantial supply of next-generation optical cable. This fiber-dense cable will more than double Lumen’s U.S. intercity fiber miles, offering significant capacity to major cloud data centers racing to stay ahead of AI workloads and high bandwidth applications fueled by massive amounts of data.

The rapid advancement of generative artificial intelligence requires at least 10 times more fiber connections within data centers, as well as a robust fiber network to transmit information between these data hubs. With this agreement, Lumen reserves 10% of Corning’s global fiber capacity for each of the next two years.

The agreement, Lumen’s largest cable purchase, will equip Lumen to meet the network infrastructure needs of major data center operators for years to come, including Microsoft, which announced last week that it’s investing with Lumen to support the rising demand on its data centers.

“Lumen is the network that delivers AI. The rise of AI is driving technology companies to quickly secure fiber and bandwidth before their competition,” said Kate Johnson, president and CEO, Lumen Technologies. “With Corning’s innovative solutions, we’re building the backbone of the AI economy. This partnership gives Lumen status as a preferred partner and secures a significant supply of next-generation fiber today and in the future.”

Lumen has the largest ultra-low-loss intercity fiber network in North America. Its U.S. intercity network includes diverse routes to more than 50 major cities across the country. Lumen distinguishes its network from others in the industry by continuously upgrading its infrastructure using a multi-conduit system, allowing for the quick deployment of the latest fiber technology.

“As generative AI increases bandwidth requirements between data centers, we’re pleased to reach an agreement with Lumen Technologies to provide our latest optical fiber and cable innovations to facilitate Lumen’s build of a new network to interconnect AI-enabled data centers,” said Wendell P. Weeks, chairman and CEO, Corning Incorporated. “This marks the first outside-plant deployment of Corning’s new gen-AI fiber and cable system, which will enable Lumen to fit anywhere from two-to-four times the amount of fiber into their existing conduit.”

To properly power AI with capacity, performance, stability and speed, Lumen is creating a digital platform on top of its physical network allowing cloud-like consumption of network services. Lumen’s Private Connectivity Fabric℠ is a custom network that includes dedicated access to existing fiber in the Lumen network, the installation of new fiber on existing and new routes, and access to Lumen’s digital services.

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Caution Concerning Forward-Looking Statements

The statements contained in this release and related comments by management that are not historical facts or information and contain words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,” “target,” “estimate,” “forecast” or similar expressions are forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include estimates and assumptions related to economic, competitive and legislative developments. Such statements relate to future events that by their nature address matters that are, to different degrees, uncertain. These forward-looking statements relate to, among other things, the company’s future operating performance, the company’s share of new and existing markets, the company’s revenue and earnings growth rates, the company’s ability to innovate and commercialize new products, the company’s expected capital expenditure and the company’s implementation of cost-reduction initiatives and measures to improve pricing, including the optimization of the company’s manufacturing capacity.

Although the company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, current estimates and forecasts, general economic conditions, its knowledge of its business and key performance indicators that impact the company, there can be no assurance that these forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws.​

Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to: global economic trends, competition and geopolitical risks, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses’ global supply chains and strategies; changes in macroeconomic and market conditions and market volatility, including developments and volatility arising from health crisis events, inflation, interest rates, the value of securities and other financial assets, precious metals, oil, natural gas, raw materials and other commodity prices and exchange rates (particularly between the U.S. dollar and the Japanese yen, New Taiwan dollar, euro, Chinese yuan and South Korean won), the availability of government incentives, decreases or sudden increases of consumer demand, and the impact of such changes and volatility on our financial position and businesses; the duration and severity of health crisis events, such as an epidemic or pandemic, and its impact across our businesses on demand, personnel, operations, our global supply chains and stock price; possible disruption in commercial activities or our supply chain due to terrorist activity, cyber-attack, armed conflict, political or financial instability, natural disasters, international trade disputes or major health concerns; loss of intellectual property due to theft, cyber-attack, or disruption to our information technology infrastructure; ability to enforce patents and protect intellectual property and trade secrets; disruption to Corning’s, our suppliers’ and manufacturers’ supply chain, equipment, facilities, IT systems or operations; product demand and industry capacity; competitive products and pricing; availability and costs of critical components, materials, equipment, natural resources and utilities; new product development and commercialization; order activity and demand from major customers; the amount and timing of our cash flows and earnings and other conditions, which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; the amount and timing of any future dividends; the effects of acquisitions, dispositions and other similar transactions; the effect of regulatory and legal developments; ability to pace capital spending to anticipated levels of customer demand; our ability to increase margins through implementation of operational changes, pricing actions and cost reduction measures; rate of technology change; adverse litigation; product and component performance issues; retention of key personnel; customer ability to maintain profitable operations and obtain financing to fund ongoing operations and manufacturing expansions and pay receivables when due; loss of significant customers; changes in tax laws, regulations and international tax standards; the impacts of audits by taxing authorities; the potential impact of legislation, government regulations, and other government action and investigations; and other risks detailed in Corning’s SEC filings.​

For a complete listing of risks and other factors, please reference the risk factors and forward-looking statements described in our annual reports on Form 10-K and quarterly reports on Form 10-Q.

Web Disclosure

In accordance with guidance provided by the SEC regarding the use of company websites and social media channels to disclose material information, Corning Incorporated (“Corning”) wishes to notify investors, media, and other interested parties that it uses its website (https://www.corning.com/worldwide/en/about-us/news-events.html) to publish important information about the company, including information that may be deemed material to investors, or supplemental to information contained in this or other press releases. The list of websites and social media channels that the company uses may be updated on Corning’s media and website from time to time. Corning encourages investors, media, and other interested parties to review the information Corning may publish through its website and social media channels as described above, in addition to the company’s SEC filings, press releases, conference calls, and webcasts.

About Corning Incorporated

Corning (www.corning.com) is one of the world’s leading innovators in materials science, with a 170-year track record of life-changing inventions. Corning applies its unparalleled expertise in glass science, ceramic science, and optical physics along with its deep manufacturing and engineering capabilities to develop category-defining products that transform industries and enhance people’s lives. Corning succeeds through sustained investment in RD&E, a unique combination of material and process innovation, and deep, trust-based relationships with customers who are global leaders in their industries. Corning’s capabilities are versatile and synergistic, which allows the company to evolve to meet changing market needs, while also helping its customers capture new opportunities in dynamic industries. Today, Corning’s markets include optical communications, mobile consumer electronics, display, automotive, solar, semiconductors, and life sciences.

About Lumen Technologies

Lumen connects the world. We are igniting business growth by connecting people, data, and applications – quickly, securely, and effortlessly. Everything we do at Lumen takes advantage of our network strength. From metro connectivity to long-haul data transport to our edge cloud, security, and managed service capabilities, we meet our customers’ needs today and as they build for tomorrow. For news and insights visit news.lumen.com, LinkedIn: /lumentechnologies, Twitter: @lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies.

© 2024 Corning Incorporated. All Rights Reserved.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801669518/en/

Corning Media Relations Contact:

John Arwood

(828) 320-3249

arwoodjm@corning.com

Corning Investor Relations Contact:

Ann H.S. Nicholson

(607) 974-6716

nicholsoas@corning.com

Lumen Media Relations Contact:

Stephanie Meisse

(419) 610-3142

stephanie.n.meisse@lumen.com

Source: Corning Incorporated

FAQ

What is the significance of the Lumen-Corning agreement for GLW stock?

The agreement secures 10% of Corning's global fiber capacity for Lumen over the next two years, potentially boosting GLW's revenue and market position in the AI-driven network infrastructure sector.

How will the Lumen-Corning deal impact AI data center connectivity?

The agreement will provide next-generation optical cable that allows for 2-4 times more fiber in existing conduits, significantly enhancing connectivity between AI-enabled data centers.

What is the expected impact on Lumen's network capacity following the Corning deal?

Lumen's U.S. intercity fiber miles are expected to more than double, substantially increasing its network capacity to support AI workloads and high-bandwidth applications.

How does the Lumen-Corning agreement address the demands of generative AI on data centers?

The agreement provides fiber-dense cable that meets the increased bandwidth requirements of generative AI, which needs at least 10 times more fiber connections within and between data centers.