In 4 months, the price of fiber optic cables has

According to the Financial Times, the global shortage of fiber optic cables has pushed up prices and extended delivery times.

According to data from market intelligence firm Cru Group, Europe, India, and China are the regions most severely affected by the crisis, with fiber optic prices rising 70% from a record low in March 2021, from $3.70 per fiber kilometer to $6.30.

 

Although the pandemic has prompted some of the largest technology and telecommunications groups to reduce capital expenditures, the demand for internet and data services has surged, leading to insufficient availability of critical but often overlooked materials. Companies such as Amazon, Google, Microsoft, and Meta, the owners of Facebook, are expanding their data center empires to meet soaring demand, including laying a massive international fiber optic network on the seabed. At the same time, governments around the world have set ambitious goals for the launch of ultra fast broadband and 5G, both of which require the laying of a large number of optical cables underground.

 

Given the sudden doubling of deployment costs, there are now questions about whether countries can achieve the goals set for infrastructure construction and whether this will have an impact on global connectivity, "said analyst Michael Finch.

According to Cru's estimation, the total consumption of cables in the first half of this year increased by 8.1% compared to the same period last year. China accounts for 46% of the total, with North America being the fastest-growing region, with a year-on-year increase of 15%. The shortage is caused by the price increase of some key components in fiber optic technology, where light is transmitted through flexible optical fibers with glass cores.

The shortage of helium gas is a key component in the manufacturing of fiber optic glass, partly due to the shutdown of factories in Russia and the United States, which has led to a 135% increase in the price of this element in the past two years. Meanwhile, according to Cru's data, the price of silicon tetrachloride, another key component in fiber production, has increased.

In my career, I have never seen an inflation crisis like this, "said the head of Corning, the world's largest fiber optic cable manufacturer CEO Wendell Weeks said that the company invented this technology in 1970.Face has played an important role. Weeks added that the company is increasing production to meet the soaring demand of governments, telecommunications companies, and large technology groups, including the construction of new facilities in the United States and Europe.

 

According to Cru's data, fiber prices have now reached their highest level since July 2019, although North America has not been hit as severely as Europe, China, and India. Weeks stated that in 2022, prices in the United States only increased by 2% and have been declining every year since 2012. We will continue to be tight for a period of time, but we will get through this super crisis, "he added.

Martijn Blanken, CEO of Exa Infrastructure, an international digital infrastructure company, said that fiber optic prices have increased by at least 20% in the past six months, and "in some cases, it is very unstable. In four months, fiber optic cable prices have almost doubled. In the 5G era, global demand for fiber optic cables is increasing, and you need to check it every day. We add terms to the customer so that we are not responsible for these price increases, "he added. This has led to a significant increase in delivery times for certain fiber products, with delivery times extended from 20 weeks to nearly a year for many smaller customers. Ankit Agarwal, Managing Director of STL, one of the largest fiber suppliers in the UK, said, "We are all prioritizing providing the fastest delivery to our largest customers

 

 

With the implementation of 5G networks in various countries, it is expected that the increase in demand will significantly drive the fiber optic market to reach 1.5 million tons by 2030. The new generation of mobile broadband will require the establishment of a dense base station network connected by fiber optic cables. In the near future, the United States, China, Japan, and the European Union will become the most profitable markets for fiber optic sales and distribution. With the comprehensive deployment of 5G networks, the fiber optic market has ushered in a new era of development. The next generation network will require a large number of fiber optic base stations because the high-frequency signals it uses cannot cover long distances. Fiber optic is the only substitute because it is the only effective cable material that provides the necessary high data transmission rate. Therefore, the demand for fiber optic is expected to skyrocket, with the global fiber optic market potentially reaching 1.5 million tons by 2030.

The United States, China, and Japan have shown the greatest potential for fiber optic consumption, as they emphasize the development of infrastructure for the fifth generation network. Due to its territorial size, the United States is likely to become the largest consumer of fiber optics. Saudi Arabia, the European Union, and Australia are also actively implementing 5G technology.

At present, China has installed about 70% of global base stations, making it the largest fiber optic consumer in 2020, reaching 135000 tons, and leading all other countries in implementing 5G speed. According to the 14th Five Year Plan (2021-2025), the number of 5G base stations in China will double by 2022, and the total number will exceed 5.1 million by 2023.

The United States ranked second with a consumption of 125000 tons in 2020. The Biden administration announced that it will allocate $100B to develop broadband access infrastructure within its eight year plan. This should accelerate the expansion of 5G network coverage in the country. The Japanese government has announced the implementation of 5G as one of its top priorities, and Japan Telecom plans to invest over $14B in the infrastructure of the 5G network, including base stations, server equipment, and fiber optics.

Fiber optic is an ideal material for achieving the high performance claimed by 5G, as it provides more than 1000 times the bandwidth of copper links. The lack of substitutes and the overall demand for optical fiber will make this part of the cable industry increasingly attractive for investment.

 

 

The Asia Pacific region is the main market for fiber optic cables

According to Markets and Markets, in 2020, the largest regions in the global fiber optic cable market were Asia Pacific, North America, and Europe, accounting for 53%, 19%, and 14% respectively. Among them, the main fiber optic markets in the Asia Pacific region are China, Japan, India, Australia, and South Korea. The continuous industrialization and infrastructure development in the region provide enormous opportunities for the use of fiber optic in various applications in the Asia Pacific region. Due to the presence of important players such as Corning, Prysmian Group, AFL Telecom, Hotel, and LS cables and systems, North America also holds a significant share of the global fiber optic cable market. Meanwhile, the emerging telecommunications plans in the Middle East and Africa will drive the development of the fiber optic cable market.

In 4 months, the price of fiber optic cables has almost doubled, and in the 5G era, the demand for fiber optic cables in various countries around the world has increased

The demand for FTTx optical cables in the United States and Europe shows a fluctuating trend

The United States is one of the major global markets for fiber optic cables. According to Cowen Financial Analyst's November 2021 report, the coverage of fiber optic households in the United States is approximately 50 million, with telecommunications companies accounting for the majority. Within five years, the share of FTTH (Fiber to Home) in the broadband market will soar from 14% to 26%, continuing to expand the Total Addressable Market (TAM).

 

According to the relevant demand data for FTTx (optical fiber to a certain location) released by CRU, the demand for FTTx optical cables in North America showed an upward trend from 2017 to 2019. In 2020, due to the impact of the epidemic, the demand decreased. Preliminary statistics show that in 2021, the demand for FTTx optical cables in North America increased to the level of 2019, reaching 28 megahertz kilometers. In Europe, there are significant differences in the coverage of FTTP, other VHCN (wired and FTTB/LAN), and other NGA (FTTC/VDSL, G.fast) technologies. Some countries/regions have performed well, with Portugal, Spain, and Sweden having more full fiber coverage than Japan and South Korea. There are also some countries/regions that have performed poorly, with 6 countries/regions (including the UK) having FTTP coverage below 15%, and 5 countries/regions (including the largest Germany) having FTTP coverage below 10%. Overall, Europe is 35.3%, slightly higher than the United States (30.1%), but significantly behind the benchmark pioneers.

 

According to the relevant global demand data for FTTx released by CRU, the demand for FTTx optical cables in the European region showed an upward trend from 2017 to 2019. In 2020, due to the impact of the epidemic, the demand decreased. Preliminary statistics show that in 2021, the demand for FTTx optical cables in the European region rebounded to 41 megahertz kilometers. The subscription volume of FTTH in Japan is on the rise, and Japan has strong competitiveness in the submarine cable market. From a global perspective, the submarine cable market is almost monopolized by the traditional three giants - NEC from Japan, Alcatel Lucent (ASN) from France, and SubCom from the United States for a long time, occupying 90% of the market share and maintaining a stable market position.

 

In February 2020, the Ministry of Internal Affairs and Communications of Japan finalized an "overseas expansion action plan" to provide financial assistance to Japanese submarine cable suppliers and investors to fight against Chinese competitors. An important factor for the Japanese government's intention to support the country's submarine cable industry is concerns about the ambitions of Chinese manufacturers in overseas markets and their ability to take tough measures at the price level. In addition, due to the fact that Japanese companies are using fiber optic preform collars

 

Domain technology has strong leadership and accounts for the vast majority of profits in the fiber optic industry chain. In 1999, FTTH (Fiber to Home) was introduced to the Japanese market, providing high bandwidth and high-speed internet access at a lower price. After continuous growth in recent years, as of March 2021, Japan's FTTH subscription volume reached 35.02 million. The global optical cable market value may reach 23.857 billion dollars in 2027

Driven by the increasing demand for the Internet of Things (IoT) and cloud services, as well as the improved utilization of fiber-based internet connections, enterprises are transitioning from traditional wired internet lines to fiber optic connections, which is expected to drive market revenue growth in the near future. According to PR Newswire, the global optical fiber market value will be 5.46 billion dollars in 2022, and will rise to 8.69 billion dollars by 2027. The rapid growth in demand for high-quality video, audio, and data transmission, the increasing use of 5G technology, the growing demand for the Internet, and the increasing demand for FTTx have become positive growth drivers driving the growth of the fiber optic cable market. However, the existence of wireless communication systems and the high initial procurement and installation costs are the main limitations to the growth of the fiber optic cable market.

 

According to Mordor Intelligence, the global optical cable market value will be 12.111 billion dollars in 2022, and will rise to 23.857 billion dollars by 2027