The beneficiary chain of AI capital expenditure is expanding beyond computing chips into network transmission infrastructure. As AI data centers require ever-increasing high-speed, low-latency connectivity, optical fiber is becoming an increasingly vital component of AI infrastructure expansion. Demand is no longer limited to cloud providers and chip companies, as major telecom operators are now beginning to take up the baton.

In a significant development, Corning has announced a multi-year, multi-billion dollar fiber supply agreement with U.S. telecom operator Verizon, extending through 2032. Following the announcement, Corning's share price rose 5% in early trading. Under the terms of the agreement, Corning will supply more than 80 million miles of high-density fiber and connectivity solutions to Verizon between 2027 and 2032, covering both consumer broadband (FTTH) and AI data center backbone network applications.

This marks yet another major long-term contract for Corning, following previous agreements with Meta, Nvidia, and Amazon. As leading customers secure production capacity well in advance, optical fiber is transitioning from traditional communications infrastructure to an essential supporting element behind AI computing expansion.

Decade-Long Agreement Supports Both Broadband and AI Networks

This order will support Verizon's efforts to expand its fiber network coverage, targeting connectivity for 40 to 50 million broadband subscribers, while also enhancing local enterprise connectivity. Additionally, the infrastructure will handle data transmission requirements for AI workloads, connecting data centers along major long-haul corridors.

Kyle Malady, CEO of Verizon Business, stated that the company is deploying a converged network architecture that serves both residential and enterprise customers while building the high-capacity, low-latency backbone network required by AI hyperscale clients.

This collaboration builds upon 30 years of partnership between the two companies. Products supplied will include Corning Contour Flow Cable, which enables more fiber to be deployed within existing conduits, thereby improving deployment efficiency. Mike O'Day, Senior Vice President and General Manager of Corning's Optical Communications business, noted that this partnership will simultaneously address AI data center connectivity needs and high-speed fiber access requirements for American households.

What makes Verizon's order particularly significant, compared to simply expanding traditional broadband networks, is that AI data traffic is emerging as a primary driver for operators upgrading their backbone networks. As AI applications scale up, the volume of data exchange between data centers, and between data centers and endpoints, continues to rise, requiring operators to expand network capacity well in advance.

Telecom Operators Emerge as New Growth Driver Following Cloud Providers

The Verizon order is not an isolated case among Corning's recent large-scale long-term agreements. Previously, Corning had reached a long-term fiber supply agreement with Meta valued at up to $6 billion, partnered with Nvidia to expand U.S. optical connectivity manufacturing capacity with fiber capacity increasing by more than 50%, and signed a multi-billion dollar data center supply agreement with Amazon.

Behind these orders lies a structural increase in fiber demand driven by AI infrastructure. Corning has disclosed that a single node in an AI data center requires approximately 16 times more fiber than a traditional switch. With cloud providers and chip companies securing supply first, telecom operators are emerging as the next significant source of demand.

On one hand, operators must continuously upgrade traditional communications networks such as FTTH. On the other hand, AI data center construction is driving long-haul backbone network expansion. The combination of these two demand streams means that the fiber industry's demand cycle no longer relies solely on traditional telecom capital expenditure.

Tightening supply and demand dynamics are also pushing prices upward. Taking G.652.D single-mode fiber as an example, prices have risen to 85-120 yuan per core kilometer. Against this backdrop of constrained supply and downstream customers seeking guaranteed delivery over the coming years, securing production capacity through multi-year agreements is becoming a significant trend across the industry chain.