Prysmian's Strategic Bet on Hollow-Core Fiber: A Game-Changer for AI-Driven Data Centers

In the relentless race to power the AI economy, infrastructure is the unsung hero. While GPUs and cloud platforms dominate headlines, the backbone of this revolution lies in the physical layer: the cables that move data. Enter hollow-core fiber (HCF), a technology poised to redefine the speed, efficiency, and scalability of data center networks. At the forefront of this shift is Prysmian Group, the world's largest cable manufacturer, which has made a bold strategic bet on HCF through a high-stakes partnership with Florida-based startup Relativity Networks. This move isn't just about incremental innovation—it's a seismic shift in how we build the future of computing.

The AI Economy's Hidden Bottleneck

Artificial intelligence is no longer a niche experiment; it's a trillion-dollar engine driving demand for hyperscale data centers. These facilities, which process exabytes of data daily, are constrained by two critical factors: latency and energy efficiency. Traditional fiber-optic cables, while revolutionary in their time, struggle to meet the demands of AI workloads. Chromatic dispersion and signal degradation limit their speed and range, forcing data centers to cluster near population centers and expensive power grids.

HCF, by contrast, uses an air-filled core to transmit light, reducing latency by up to 50% and extending transmission distances by 1.5 times compared to conventional fiber. This isn't just faster—it's a paradigm shift. Data centers can now be sited closer to underutilized power sources, including green energy, without sacrificing performance. For hyperscalers like Amazon, Google, and Meta, this means cheaper, cleaner infrastructure with minimal trade-offs.

Prysmian's Strategic Move: From Manufacturer to Innovator

Prysmian, a €15 billion global leader in energy and communications cables, has historically played it safe. But in March 2025, the company announced a long-term partnership with Relativity Networks, a startup spun out of the University of Central Florida's College of Optics and Photonics. The collaboration involves retrofitting a facility in Eindhoven, Netherlands, to co-manufacture HCF and cabling. This isn't a minor experiment—it's a full-scale production rollout.

Relativity's HCF technology, already deployed in 25 miles of cabling for a hyperscaler, is designed to integrate seamlessly with existing infrastructure. The startup has raised $10.7 million in funding, including an oversubscribed seed round, and is in talks with nearly all major hyperscalers (Microsoft being the notable exception). Prysmian's role is clear: leverage its 30+ years of fiber manufacturing expertise to scale production and bring HCF to market at volume.

Market Dynamics: A $2.5 Billion Opportunity by 2033

The hollow-core fiber market is still in its infancy, but its growth trajectory is staggering. In 2024, the market was valued at $1.2 billion, and analysts project it will surge to $2.5 billion by 2033, growing at a 9.2% compound annual growth rate (CAGR). This growth is fueled by three forces:
1. AI's insatiable demand for low-latency, high-throughput networks.
2. The push for energy-efficient infrastructure, as HCF reduces power consumption by minimizing signal loss.
3. Regulatory and environmental pressures to decarbonize data centers.

Prysmian and Relativity are not alone in this race. Competitors like NKT Photonics, Lumenisity, and GLOphotonics are also developing HCF solutions. However, Prysmian's scale, global footprint, and partnership with a startup with deep academic roots give it a unique edge. The company's Digital Solutions EVP, Frederick Persson, called the technology “a leap we didn't have before,” signaling a strategic pivot toward leadership in next-gen connectivity.

Risks and Realities: Can HCF Deliver?

While the potential is enormous, challenges remain. HCF is more expensive to produce than traditional fiber, at least initially. Reliability and long-term durability in real-world conditions are untested at scale. And the market is still fragmented, with multiple players vying for dominance.

However, the urgency of AI infrastructure development is accelerating adoption. Hyperscalers are already laying HCF in proof-of-concept projects, and the cost gap with conventional fiber is expected to narrow as production scales. Relativity's CEO, Jason Eichenholz, has called the demand “insatiable,” and Prysmian's partnership suggests it's betting the house on this outcome.

Investment Implications: A High-Velocity Play on the Future

For investors, Prysmian's HCF initiative represents a high-velocity, high-reward opportunity. The company's stock has historically traded in line with the broader industrial sector, but its recent pivot into HCF could unlock new value. With AI-driven data center spending projected to reach $1.2 trillion by 2030, the ability to supply the “veins” of this infrastructure is invaluable.

Prysmian's partnership with Relativity also positions it to benefit from the green energy transition. By enabling data centers to tap into renewable power sources, HCF aligns with ESG trends and regulatory tailwinds. This dual value proposition—technical innovation and environmental sustainability—could drive both revenue growth and margin expansion.

Conclusion: Building the Infrastructure for Tomorrow

Prysmian's bet on hollow-core fiber is more than a product launch—it's a redefinition of its role in the global tech ecosystem. By aligning with Relativity Networks, the company is not just manufacturing cables; it's engineering the next generation of data infrastructure.

For investors, this is a rare chance to participate in a foundational shift. HCF isn't just a faster cable—it's a key enabler of the AI economy. As Relativity's CEO put it: “This is the technology the data center builders have been waiting for.” If the market's growth projections hold, Prysmian's early-mover advantage could translate into decades of outsized returns.

The question isn't whether HCF will win—it's how quickly it will reshape the world. And in that race, Prysmian is already in the lead.