Nvidia’s expanded partnership with Corning to replace copper with optical fibre in AI data centers underscores mainland China’s pivotal position in the global optical communications market. China’s extensive supply chain and manufacturing scale make it the backbone of the rising demand for high-capacity optical components driving AI growth.
- China produces over half the world’s optical fibre and cables.
- Nvidia-Corning pact expands US optical fibre capacity to support AI.
- Optical fibre prices in China have increased fourfold since 2025.
What happened
Nvidia has deepened its partnership with US fibre optics manufacturer Corning to replace copper connections in advanced rack-scale AI systems, significantly expanding US optical-connectivity manufacturing capacity. This move includes the addition of three new facilities dedicated to optical technologies, aiming to increase domestic fibre production by more than 50 percent to meet the surging demand from AI data centers.
Meanwhile, China's optical fibre industry continues to dominate global output, producing nearly 60 percent of optical preforms and over half of fibre and cable supplies worldwide. This partnership sheds light on China's central role in the global optical communications supply chain, despite Nvidia and Corning’s push to increase domestic US capacity.
Why it matters
AI data centers require more than ten times the optical fibre of conventional centers due to higher networking demands. This enormous growth in fibre demand, driven by the AI boom, is fueling significant price increases and investor interest, with China’s optical fibre prices climbing from around 40-50 yuan per fibre-kilometre in late 2025 to over 200 yuan recently.
The Nvidia-Corning deal symbolizes a strategic effort to bolster US manufacturing in a critical supply chain area while revealing how dependent advanced AI infrastructure development remains on Chinese optical fibre production. This dynamic impacts global technology supply chains amid intensifying geopolitical and economic considerations.
What to watch next
Watch for how Nvidia’s expanded US manufacturing footprint will influence supply dynamics between US and Chinese optical fibre sectors, particularly as global fibre demand is forecast to grow from 760 million to 889 million fibre-kilometres between 2026 and 2027. The pace at which new capacity comes online will be critical to meeting AI infrastructure needs.
Investor interest in Chinese optical fibre and module manufacturers is likely to remain strong as AI-related networking demands rise. The development of silicon photonics and other optical interconnect technologies will also be a key area of innovation, potentially reshaping the competitive landscape within the global optical communications market.