NVIDIA "Investing billions of dollars in Corning factory construction... separate from equity stake"

NVIDIA "Investing billions of dollars in Corning factory construction... separate from equity stake"

NVIDIA CEO Jensen Huang announced that, separate from the right to acquire an equity stake by investing up to $3 billion in the glass and optical fiber manufacturing company Corning, NVIDIA will provide billions of dollars in prepayments for the construction of Corning's new factories.

In an interview with CNBC's 'Jim Cramer' program on the 7th (local time) with Corning CEO Wendell Weeks, CEO Huang stated, "We are going to increase fiber optic production capacity in the United States tenfold. He (Corning) will build entirely new factories. NVIDIA has the privilege of becoming a shareholder in Corning. And a large part of what we promised is billions of dollars in prepayments that were not included in the press release (on the 6th)."

CEO Weeks also confirmed the existence of the prepayments, without disclosing the exact amount, and explained that this is a separate agreement from the equity investment.

He said, "They (NVIDIA) are directly investing billions of dollars in the capital needed to build these factories. And also, CEO Jensen Huang wanted to be a long-term investor in Corning."

Earlier, NVIDIA and Corning announced on the 6th that they had entered into a multi-year commercial and technical partnership to supply advanced fiber optics and other solutions necessary for powering next-generation AI infrastructure.

Through this agreement, Corning plans to increase its optical connectivity production capacity in the U.S. tenfold and its fiber optic production capacity by 50%.

They also decided to establish three new advanced manufacturing facilities in North Carolina and Texas.

CNBC reported that NVIDIA acquired the right to invest up to $3.2 billion (approximately 4.6 trillion won) in Corning through this agreement. NVIDIA secured warrants to purchase 15 million shares of Corning for $2.7 billion ($180 per share), and an additional $500 million was paid upfront, the report said.

However, on this day, the CEOs of both companies stated that NVIDIA would provide billions of dollars for Corning's factory construction, separate from acquiring an equity stake.

NVIDIA partnered with Corning because traditional copper cables have reached their limits in the process of maximizing the efficiency of AI data centers.

NVIDIA plans to fully implement 'co-packaged optics' technology, replacing approximately 5,000 copper cables in its next-generation AI rack, 'Vera Rubin', with Corning's fiber optics.

Fiber optics are not only much faster than copper cables but also consume 5 to 20 times less power.