Corning CIS

The Russian subsidiary of the American company Corning Inc., specializing in the production of special glasses, ceramics and related materials and technologies, advanced optics and is the largest supplier of advanced optical solutions in the aerospace and military industries of the United States.

Corning CIS has been operating since the early 2000s. and imports and wholesales optical fiber, as well as provides information services and information processing services, conducts research and computer modeling in the field of telecommunications on the instructions of the Corning Incorporated scientific centers (USA).

Buyers of optical fiber in the Russian market are companies operating in the telecommunications sector. The largest customers are optical fiber cable manufacturers (cable factories).

History

2023: Corning Incorporated failed to quickly find a buyer for its Russian assets

Corning Incorporated, which planned to sell its Russian assets in 2022, was unable to quickly find a buyer for them. Now the company is considering not only the sale option, but also the write-off of these assets, it follows from the explanations for the financial accounting of Corning CIS for 2022, published in the database of the Federal Tax Service.

From the same explanations for financial accounting, it follows that in addition to a 100% stake in the authorized capital of Corning CIS, Corning Incorporated owns 25% of the capital of the Samara Optical Company, with which it created a joint production of fiber-optic cable since the mid-90s, and 25% + 1 share of the manufacturer of fiber-optic cable "Transvok."

The revenue of the Samara Optical Company in 2022, according to the FTS database, decreased by 9%, to 276.8 million. A net loss of 11.6 million rubles was received. Transvok's revenue, on the contrary, increased - by 68%, to 1.3 billion rubles, and a net profit of 492.1 million rubles was received.

At Corning CIS itself, turnover in 2022 fell by 61%, to 494 million rubles. The company ended the reporting period with a net loss of 28.4 million rubles.

Corning Incorporated decided to cease commercial activities in Russia in March 2022 "(photo - John Greim/LightRocket via Getty Images")

The vast majority of Corning CIS's revenue came from sales to related parties based abroad, mainly services: computer modeling work for Corning Reserch & Development research centers. Corning CIS also provided information processing services to a Corning Incorporated legal entity associated with it.

Corning CIS reports say that in 2022, by decision of the parent company, its procurement and sales operations were suspended "due to sanctions and logistics problems in the United States and Europe until the crisis in Ukraine is resolved ."

From the official message of the parent company, it followed that sales were stopped due to the position of Corning in Ukraine^[1]. At the same time, Corning announced the possibility of making limited exceptions if we are talking about products necessary to save lives. Corning also planned to close its research center in Russia.

During the reporting period, Corning CIS managed to sell optical fiber only for 119 million rubles against 837 million rubles a year earlier. Fiber supplied to Russia was purchased from the American Corning Incorporated and the Indian Corning Technologies India PVT.

Among the buyers of fiber optic Corning Incorporated are Russian manufacturers of optical cable. Among them are Inkab, OKS 01, Saranskkabel - Optics, Altai - Cable. Moreover, since 2019, these four have been fighting for the purchase of American fiber with the FAS, which opened a conspiracy case due to the companies having long-term contracts with Corning Incorporated. Antimonopolists believe that such agreements close the possibility of cooperation with the "first and only" Russian optical fiber manufacturer - OVS, which was created by Rusnano, Gazprombank and the Government of Mordovia^[2] the^[3].

2022: Decision to Terminate Business Activities

The parent company Corning Incorporated on March 16, 2022 decided to terminate the commercial activities of Corning CIS in connection with sanctions and logistics problems in the United States and Europe "until the crisis is resolved" in Ukraine. This follows from the explanations for the financial accounting of Corning CIS for 2021, published in the database of the Federal Tax Service. From there it follows that as of July 31, 2022, the commercial activities of the Russian office were already terminated.

Despite the aggravation of the situation around Ukraine, the company carried out its main activities without significant complications until April 2022. However, due to increasing international and political pressure, the management of the group's parent company was forced to report plans to temporarily terminate commercial activities in Russia, it is also indicated there.

The explanations to the financial accounting also talk about plans to sell the existing assets of Corning CIS.

2019: FAS opened a case on suspicion of imposing products on Russian factories

On September 11, 2019, the Federal Antimonopoly Service (FAS) of Russia announced the initiation of a case against the American company Corning, which is suspected of imposing its products on Russian factories.

According to the regulator, between Corning and at least four manufacturers of fiber-optic communication cables - Altai-Cable LLC, OKS 01 LLC, Saranskkabel-Optika LLC and Incab LLC - agreements were concluded on the guaranteed purchase of optical fiber manufactured by Corning in the amount of 85-100% of its own need, as well as the right of the American company on priority supplies.

FAS opened a case against fiber manufacturer Corning

These companies are suspected of entering into anti-competitive agreements in the single-mode optical fiber market. The basis for initiating the FAS case was the complaint of the Mordovian manufacturer Optical Fiber Systems, the ministry said in a statement.

According to Interfax, citing the press service of Rusnano (the state corporation was one of the investors in Optical Fiber Systems), the access of new players to the Russian optical fiber market is limited due to the actions of competitors that make it unprofitable to produce domestic optical fiber. "

Optical fiber manufacturers from the United States and Japan, taking advantage of their dominant position, have been artificially lowering prices for optical fiber on the Russian market since 2016 compared to the level of world prices by more than 20%, which prevents the company from operating on the domestic market in a zone of positive profitability, Rusnano said.

The Corning fiber plant, which supplies to Russia, is located in India, so the company manages to bypass 30% of the import duty on American optical fiber, Rusnano notes^[4]

2003: Opening of a separate division in St. Petersburg

In January 2003, a separate division was created in St. Petersburg. Its main activities are technological research and computer modeling of processes in the field of telecommunications, carried out by tasks of scientific centers Corning Incorporated (USA).

Notes