NVIDIA "Investing Billions of Dollars in Corning Factory Construction... Separate from Equity Acquisition"

NVIDIA "Investing Billions of Dollars in Corning Factory Construction... Separate from Equity Acquisition"

NVIDIA CEO Jensen Huang announced that in addition to the right to acquire equity by investing up to $3 billion in 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 looking to increase optical fiber 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, although he did not disclose 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."

Previously, NVIDIA and Corning announced on the 6th that they had entered into a multi-year commercial and technical partnership to supply advanced optical fibers and other solutions needed to power next-generation AI infrastructure.

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

In addition, three new advanced manufacturing facilities will be established in North Carolina and Texas.

U.S. business broadcaster CNBC reported that NVIDIA obtained 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 a separate $500 million was paid upfront, according to the report.

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

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

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

Optical fibers are not only much faster in transmission speed compared to copper cables but also consume 5 to 20 times less power.