- Demand for CommScope’s broadband products remains low, but its data center biz is on the rise
- CommScope can provide fiber for a variety of data center components that can support GenAI
- On the cable front, CommScope’s got a “unified” DOCSIS 4.0 product in the works
CommScope is itching to get its broadband groove back with the Broadband Equity, Access and Deployment (BEAD) program. But in the mean time, demand from data centers could provide some cushion as it waits for BEAD projects to kick off.
Though CommScope remains “bullish” on broadband, “a level of uncertainty remains on the timing of a true demand recovery and the timing of BEAD,” said CEO Chuck Treadway on the company’s Q2 earnings call.
Of course, the million dollar question is when BEAD deployments will actually begin. Treadway’s answer? The “latest market feedback” suggests that’ll happen sometime in the second half of 2025, he said.
But for now, the needle is not moving all that much. Demand for broadband products “remains low” compared to 2021 and 2022 as customers “continue to assess their upgrades, including evaluating the impact of BEAD and other federal funding programs on their build plans.”
The “BEAD bump” in broadband will take time to appear, according to neXt Curve’s Leonard Lee, “as shovel-ready projects begin to come online and procurement teams trigger orders that hit CommScope’s and its peers topline.”
But the broadband business isn’t the be-all and end-all for CommScope’s revenue growth. The company is experiencing “stronger recovery” in the building and data center business than in broadband, Treadway noted, with demand driven by the need for bandwidth and data capacity. Capacity required for – you guessed it – generative artificial intelligence (GenAI).
The increased demand really isn’t much of a surprise, Lee said.
“At the moment there is a lot of infrastructure investment going into new GenAI supercomputing data centers by hyperscalers in particular,” he told Fierce. “Data center networking is a big opportunity simply because there is massive data center building spending happening.”
CommScope’s not the only company eyeing the data center boom. Lumen recently landed $5 billion in contracts to connect data centers to its fiber network and fellow vendor Corning anticipates GenAI will boost demand for its optical fiber products.
“There’s an incredible amount of fiber equipment” required to support GenAI in data centers, and not just fiber cabling, said Earl Lum, president of EJL Wireless Research.
CommScope can participate in “all levels of that architecture for the data center, from just the cabinets all the way down to the actual fiber optic cables,” he told Fierce. “They have everything from single fiber to multiple fiber connectors” that would be needed for data center applications.
However, reports of Nvidia delaying the rollout of its Blackwell AI chips could stunt the data center growth CommScope’s seeing, Lum noted.
“That could reverse the recovery they just saw,” he said. “Anyone in the data center market itself is going to see a fallout from any potential delays from the Nvidia chip situation.”
For what it is worth, a Nvidia spokesperson told Fierce “Blackwell sampling has started, and production is on track to ramp in 2H. Beyond that, we don’t comment on rumors.”
Cable power plays
CommScope in May scooped up Casa Systems’ cable assets for $45.1 million – a move that could help the company accelerate its entry into the virtual CMTS market.
Indeed, Treadway said the acquisition will provide CommScope cash flow from Casa’s legacy customer base along with new products like “the virtualized CMTS” and an upgraded PON portfolio.
On the DOCSIS 4.0 front, he said CommScope’s working on a “unified” product that will allow cable operators to choose both extended spectrum (ESD) and full-duplex (FDX) DOCSIS to upgrade their networks to 10G. CommScope is collaborating with service providers and its silicon partner, though Treadway didn’t mention any names.
The company also finalized an agreement with a “large Tier 1 customer” for FDX products, which will begin shipping in the second half of 2024.
