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) for the supply of next-generation optical cable. This deal will more than double Lumen's U.S. intercity fiber miles, providing substantial capacity to major cloud data centers to meet the increasing demands of AI workloads and high-bandwidth applications. The agreement reserves 10% of Corning's global fiber capacity for each of the next two years.

This partnership aims to address the network infrastructure needs of major data center operators, including Microsoft, which recently announced an investment with Lumen. The new fiber-dense cable will enable Lumen to fit two-to-four times the amount of fiber into existing conduits, marking the first outside-plant deployment of Corning's new gen-AI fiber and cable system.

Positive

• Agreement will more than double Lumen's U.S. intercity fiber miles
• Reserves 10% of Corning's global fiber capacity for next two years
• Positions Lumen as a preferred partner for AI-driven network infrastructure
• Enables fitting 2-4 times more fiber into existing conduits
• Supports rising demand from major data center operators like Microsoft

Negative

• None.

Insights

Financial Analyst

This agreement between Corning and Lumen is a significant development in the telecommunications and technology sectors, with far-reaching implications for both companies and the broader AI infrastructure landscape.

Key financial implications:

• Lumen's commitment to reserve 10% of Corning's global fiber capacity for two years represents a substantial revenue stream for Corning, potentially worth hundreds of millions of dollars.
• Lumen's investment in doubling its intercity network miles signifies a major capital expenditure, likely to impact its balance sheet and future earnings.
• The partnership positions both companies favorably in the rapidly growing AI infrastructure market, potentially leading to increased market share and revenue growth.

While specific financial figures aren't disclosed, this deal's scale suggests it could materially impact both companies' upcoming quarterly results. Investors should closely monitor Corning's fiber segment performance and Lumen's capital expenditure trends in future earnings reports.

The agreement's long-term nature provides revenue visibility for Corning and capacity assurance for Lumen, potentially reducing volatility in both companies' stock prices. However, the success of this investment will ultimately depend on the actual growth rate of AI-driven data center demand, which remains a key area of uncertainty.

Tech Expert

This partnership between Corning and Lumen marks a pivotal moment in the evolution of AI infrastructure. The deployment of Corning's new gen-AI fiber and cable system represents a significant technological leap forward.

Key technological aspects:

• Corning's innovation allows for 2-4 times more fiber in existing conduits, dramatically increasing data transmission capacity without the need for new physical infrastructure.
• Lumen's multi-conduit system enables quick deployment of the latest fiber technology, providing a competitive edge in network upgrades.
• The creation of Lumen's Private Connectivity Fabric℠ on top of its physical network indicates a shift towards more flexible, cloud-like consumption of network services.

This technological advancement is important for meeting the exponential growth in bandwidth requirements driven by generative AI. The ability to fit more fiber into existing conduits is a game-changer, potentially accelerating the rollout of high-capacity networks while reducing costs and environmental impact.

However, it's important to note that while this agreement addresses the 'pipes' for data transmission, the real test will be in how effectively this increased capacity is utilized. The success of this infrastructure upgrade will depend on the development of AI applications that can fully leverage this enhanced network capacity.

Market Research Analyst

This agreement between Corning and Lumen is a clear indicator of the burgeoning demand for high-capacity fiber networks driven by AI advancements. It offers valuable insights into market trends and potential shifts in the competitive landscape.

Market implications:

• The deal suggests that major tech companies are racing to secure fiber and bandwidth, potentially leading to a surge in demand for fiber optic products and network infrastructure services.
• Lumen's status as a preferred partner could give it a competitive edge in attracting high-profile clients like Microsoft, potentially reshaping market share dynamics in the telecom industry.
• The focus on AI-enabled data centers indicates a significant market shift, with potential ripple effects on related industries such as cloud computing, data storage and AI chip manufacturing.

This agreement could set off a chain reaction, prompting other telecom companies to make similar investments to remain competitive. It may also accelerate the adoption of AI technologies across various sectors, as improved network infrastructure removes a key bottleneck.

However, investors should be cautious about potential market saturation. If multiple players rush to expand capacity simultaneously, it could lead to overcapacity in some areas, potentially impacting profitability. The key will be monitoring how well supply aligns with actual demand growth in AI-driven data transmission over the coming years.

• 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. and DENVER, Aug. 1, 2024 /PRNewswire/ -- 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 are 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. 

Visit Corning's media resource center for information, videos, and images.

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. 

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 our customers capture new opportunities in dynamic industries. Today, Corning's markets include optical communications, mobile consumer electronics, display, automotive, solar, semiconductors, and life sciences.

 

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SOURCE Lumen Technologies

FAQ

What is the significance of Lumen's agreement with Corning for LUMN stock?

The agreement positions Lumen (LUMN) to meet growing AI-driven network demands, potentially boosting its market share and revenue in the data center connectivity sector.

How will the Corning agreement affect Lumen's (LUMN) network capacity?

The agreement will more than double Lumen's U.S. intercity fiber miles, significantly increasing its network capacity to support AI workloads and high-bandwidth applications.

What percentage of Corning's global fiber capacity has Lumen (LUMN) reserved?

Lumen has reserved 10% of Corning's global fiber capacity for each of the next two years.

How does this agreement relate to Lumen's (LUMN) recent partnership with Microsoft?

The agreement with Corning will equip Lumen to meet the network infrastructure needs of major data center operators, including Microsoft, which recently announced an investment with Lumen.