3M targets AI data centers with faster fiber-optic connections

3M is positioning a fiber-optic connectivity product as a small but potentially faster-growing part of its business as artificial intelligence data centers require more networking capacity. Chief executive Bill Brown told CNBC that the company’s expanded beam optical connectivity can reduce installation time for hyperscale data-center operators by as much as 85%.

The product remains modest relative to 3M’s broader operations. Wall Street expects the industrial group to generate about $25 billion in annual sales this year, while Brown said on the company’s Tuesday earnings call that the optical connectivity business is expected to produce $40 million to $50 million in revenue this year.

Brown said that revenue could increase four to five times over the next several years as large cloud companies replace more copper networking with fiber-optic systems. He also estimated on the earnings call that the total addressable market for expanded beam optical technology is about $1 billion this year and could reach roughly $2 billion by 2028.

How the technology fits into AI infrastructure

AI data centers require large volumes of data to move quickly between servers, networking equipment and storage systems. Fiber-optic connections transmit data using light rather than electrical signals, which makes them central to higher-bandwidth network designs.

3M’s expanded beam technology differs from conventional point-to-point fiber connections by spreading light over a broader surface before coupling it back into the receiving connection. Brown told CNBC’s “Mad Money” that this design makes connections less vulnerable to dust and vibration, two factors that can interfere with data transmission in dense infrastructure environments.

Brown said on CNBC that the installation advantage is valuable for hyperscalers, the large cloud and internet infrastructure operators building AI capacity. “Time is money for hyperscalers,” he said.

The company has built intellectual property around the product, according to Brown, who said 3M has 100 patents in the field and another 50 pending.

Microsoft certification and capacity plans

Microsoft has certified 3M’s expanded beam optical connectivity for use in Azure data centers after several years of testing, according to a Microsoft announcement cited by CNBC. The certification gives 3M a reference customer in one of the largest global cloud platforms as cloud providers expand AI computing infrastructure.

Brown said 3M is running trials with other hyperscale operators and is increasing manufacturing capacity. On the earnings call, he said the company plans to double production capacity this year and then double it again over the following 12 to 18 months.

Even with those expansions, Brown said 3M expects to use contract manufacturers and a wider supplier network to meet demand. That approach would allow the company to add output without relying only on its own factories, though Brown’s comments did not specify the scale of outside manufacturing.

3M is still best known to many consumers for products such as Post-it notes and Scotch tape, but the company’s comments show how suppliers outside the traditional semiconductor and cloud hardware sectors are seeking roles in the AI infrastructure buildout. For 3M, Brown described the optical connectivity product as an emerging business tied to the industry’s move toward fiber-based networking.

This story draws on original reporting from CNBC.