3M：研发引擎是否重启？关于与微软数据中心连接的EBO合作的思考

+19173448543varun.govindaraj@bernsteinsg.com +19173448506mark.moerdler@bernsteinsg.com UnderperformPrice Target +19173448316firoz.valliji@bernsteinsg.com MMM +19173448342shelly.tang@bernsteinsg.com 3M: Is the R&D engine re-igniting? Thoughts on the EBOpartnership with Microsoft for data center connectivity. 3MrecentlyannouncedastrategicpartnershipwithMicrosoftcenteredaroundExpandedBeamOptical (EBO)technology-3M's non-contactoptical fiber connectivitytechnology for next-generation Al data centers. At its core,EBO addresses a key operationalchallenge inoptical fiberconnectivity:contamination fromdustparticles.UnliketraditionalMulti-fiberPushOn(MPO)connectors (whichrelyonphysicalfiber-to-fibercontactandrequire regularinspection and cleaningprocedures),EBO uses alens arrayto expand andrefocus light across an air gap.The result is a connector that is inherentlymore tolerant todust and contamination,while materially reducing installation complexity and deploymenttimelines.According to 3M, installation times can be reduced from roughly threeminutes (foratraditional MPO)tothirtysecondsperconnection (forEBO).Thereis somestrategic significancebeyondthe Microsoftpartnership.Generally,successfultechnologyadoptionbegetsmoreadoption,andvalidation byonelargehyperscaleroftenaccelerates broader industryuptake.Wethink Microsoft's endorsement serves as animportant signaltootherhyperscalers evaluating EBOopticalfiberconnectivityarchitecturesfor increasingly dense Al clusters, where reliability,deployment speed,and operationalefficiencyarecritical designconsiderations.Fromacompetitivestandpoint,3Mappearsreasonablewell-positioned.Withpatentprotectionextendinguntilatleast2041,participation inthe broader EBO ecosystemthroughthe Multi-Source Agreement, anearlymanufacturinglead,andthe absenceof crediblehyperscaler-scale competitiveofferings collectivelystrengthen the company's position.While important questionsstandards,we believe the announcement (link)represents a meaningful milestone in thecommercializationjourneyofEBO For our own thesis on 3M,wherewe havehighlightedweakness inR&D as a reason driverbehind ourtepid growthforecasts,we see the partnership as an encouraging move inthe right direction. InvestmentImplications WerateMMMUnderperformwithaTPofs131.Weremainconcernedlonger-termaroundR&D and PFAS.However, we do acknowledge that this partnership indicates 3M is makingprogress in the right direction on R&D. copper wires,they carry information as pulses of light, enabling high bandwidth, low latency,and efficient transmission acrossthe entire data center ecosystem.As Al rack densities continue to increase,the volume of data moving between GPUs,switches,data transfer.In simpleterms,the primaryfunction of optical fiber is to move data quickly,reliably,and with minimal signalloss between servers,racks,rows and buildings,allowing thousands ofservers to operate as a single coordinated system.Inhyperscalerand Al-focuseddata centers,networkperformance is increasingly becomingas important as computeperformanceitself. optical fiber connectors come into play.Connectors are the physical interfaces thatjoin one optical fiberto another,creating thedatapathwaysthatlink servers,switches,storage systems,andnetworking equipmentacrossa data center.Becauselightmustpass from one fiber into the next with very high precision, connector quality directly impacts network reliability and performance.Traditional connector designs (called Multi-fiber Push On or MPO) rely on physical fiber-to-fiber contact, which makes themhighly sensitive to contamination and handling. What is the Expanded Beam Optical (EBO)technology? Thefundamental innovation behind EBOis theelimination of physicalcontact between opticalfibers.Traditional MPOa mandatory inspection-and-cleaning workflow prior to deployment. Even a micro-thickness dust particle can causewhile simplifying installation procedures.3M received a patent for EBO technology in Jan 2025, with an expiration through atleastAugust2041. AdvantagesofEBOoverTraditionalMPO Thepractical benefits of EBObecomeapparentwhencompared directly against traditional MPO connectors.Thenon-contactdesignmateriallyreduces contamination sensitivity,removes inspectionrequirements,minimizes cleaning procedures,andshortens installation times by~85% (according to a 3M whitepaper explaining deployment ata hyperscalerfacility in the Unitedconstructionwherethousands ofopticalfiber connections mustbedeployed andmaintained Overviewof3MandMicrosoftstrategicpartnership In our view, the partnership creates clear value for both parties.For Microsoft, EBO offers lower installation costs, improvedreliability in increasingly dense Alarchitectures,and faster deployment timelines that can accelerate themonetization ofefficiencycantranslateinto sizable economic benefits.For3M,thevaluepropositionisvalidation.Microsoft'sadoptionprovidesthe first hyperscaler-scale validation of EBO, supports the rationale behind recent manufacturing expansi