Nvidia partners with Corning to boost the supply of optical network components

Nvidia Corp. will help publicly traded glass maker Corning Inc. boost the rate at which it produces parts for optical data center networks.

The partnership, which the companies announced today, will see Corning build three new factories in North Carolina and Texas. The facilities will boost the manufacturer’s optical hardware production capacity in the U.S. by a factor of 10. They will also create more new 3,000 jobs.

Separately, Nvidia has reportedly received warrants to purchase up to 18 million Corning shares. A warrant is a contract that enables an investor to buy stock at a predetermined price. The 18 million shares covered by Nvidia’s warrants are worth more than $3.2 billion.

The companies didn’t specify exactly what products Corning will make at the new plants. One likely candidate is its portfolio of server-grade fiber optic cables. Corning cables can be found in many artificial intelligence clusters, which is the reason the company has caught Nvidia’s attention. 

Glass manufacturers optimize their server-grade fiber optic cables for not only speed and reliability but also ease of installation. The reason is that a data center requires upwards of thousands of miles of fiber optic wiring, which means that cable deployment can be highly time-consuming. Speeding up the process accelerates data center construction and maintenance.  

Many of Corning’s fiber optic cables are based on a design it calls Flow Ribbon Technology. The technology includes several optimizations that are specifically designed to speed up installation.

Fiber optic cables are often installed in flexible tubes called microducts, which are themselves placed in tubes. Cables based on Corning’s Flow Ribbon Technology can be placed into microducts using jets of compressed air. According to the company, that approach is significantly faster than manual installation. 

Data center operators often splice, or link together, different servers’ fiber optic cables to speed up the flow of traffic. Before two cables can be linked, technicians have to peel back their outer layer to expose the glass strands inside. Corning’s Flow Ribbon Technology makes it possible to peel cables without using sharp tools, which both speeds up the process and boosts worker safety.

The company also sells a second line of data center cables called the MMC series. It can be used with co-packaged optics, or CPO, devices. Those are data center switches with a built-in transceiver, a chip that turns light beams into electrical signals and vice versa. Transceivers were historically implemented as a standalone device.

Nvidia entered the CPO market last March with a line of switches optimized for AI clusters. Earlier this year, it invested $4 billion in two companies that supply optical components for CPO devices.

Corning sells its fiber optic cables alongside several auxiliary devices. The company makes so-called EDS, or edge distribution systems, that reduce the amount of work involved in organizing server cables. It also sells observability devices that data center operators can use to monitor network health. 

Corning’s shares jumped more than 12% on the news of that it’s partnership with Nvidia. The reason is that the collaboration will boost one of the company’s most important revenue growth drivers. Corning’s optical communications business grew 36% last quarter on a year-over-year basis, nearly twice as fast as its overall sales.

The company’s other revenue sources span a wide range of industries. Corning makes the Gorilla Glass that Apple Inc. uses to build iPhone displays. It also sells pharmaceutical vials, car parts and optical components for space telescopes. Corning produced the James Webb Space Telescope’s near-infrared light sensor and parts of its lens pointing module.

Image: Nvidia