Corning aflutter about U.S.-made fiber

Corning is heading into “transformational times.”

At least, that’s what Mike Bell, who leads Corning’s optical communications business, said during a 17-minute corporate video that Corning produced in December.

The video clearly and succinctly outlines what Bell believes is a “large, multi-year wave” of double-digit growth in the fiber industry in general. And that’s critical for Corning, because fiber is the company’s biggest business unit.

Fiber catalysts

A number of huge shifts in the telecommunications market are putting Corning in a bull’s eye. First, the Infrastructure Investment and Jobs Act (IIJA) passed last year allocates fully $42 billion for the construction of broadband networks around the country. A significant portion of that spending – Corning expects north of 10% – is expected to target fiber networks specifically. And beyond that government funding, a wide range of public and private companies have begun substantial investments of their own into new fiber buildouts.

One analyst firm described the fiber situation as “historic.”

“In the US, it took two decades for the first 40 million fiber home passings, while it may only take the next five years for the next 40 million homes,” wrote the financial analysts at Cowen in a recent note to investors. “Passings” are locations with fiber. They argued that investor interest in fiber has reached a “fever pitch.”

But for Corning, there’s one more key element at play: The IIJA passed last year includes a “Build America, Buy America” provision. Under the terms of the provision, 55% of the cost of the components in a telecom product must come from US-based sources.

“Corning is the only meaningful domestic fiber OEM,” noted the Cowen analysts.

Corning executives are well aware of the situation.

Buying Corning

“As the US infrastructure plan rolls out, it could add as much as a billion dollars a year to the market, and we’re especially well positioned to capture that growth because of our leadership and because of the plan’s ‘Buy American’ provision,” Bell said. “And for Corning, this is going to be big. And it’s going to be big for many years.”

During Corning’s just-finished fiscal year, sales in the company’s optical communications business grew 22% year-over-year to $4.3 billion. And company executives expect volumes and margins to expand in the coming months and years.

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