A variety of industries including the medical, military, telecommunications, industrial, data storage, networking, and broadcasting are able to apply and use fiber optic technology in a variety of applications. The telecommunications industry however is the dominant user of optical fiber technology.
There may a lot of uncertainty about how networks might evolve, but it is clear that this decade will bring about a lot of change in the telecom landscape to allow for further rollout of next-generation networks. And the one thing these networks will have in common is that there will be significantly more fiber under the soil.
In fact, 2020 has been the inflection point year for the OFC industry. Internet user growth accelerated as almost 2 million new users were getting added every day, which was unprecedented, increasing the percentage of globally connected population to almost 60 percent.
A disproportionate amount of investment was seen coming in to create these networks. Reliance Jio raised capital of USD 20 billion and European FTTx networks saw financial investments by various private equity players. And this momentum has further gained traction. Some of the notable investments that were announced in Q3 included Amazon’s investment in data centers in India, FCC’s allocation of an additional USD 10 billion in the Rural Digital Opportunity Fund in USA, Telefónica and Allianz private equity investment of close to USD 5 billion to create FTTH infrastructure in Germany, as well as EQT’s investment in Proximus to create fiber-to-the-home networks in Belgium.
It is obvious that the decade of digital network creation has started, displaying a continued strength, powered by an investment momentum, for all to see. On the OFC front, the demand-supply gap, which had been there, is decreasing, and that is more evident from the lead times getting tightened in markets like US, North America, and Europe. And there has not been any significant change or shift on the pricing front.
The demand for fiber is back! Whereas, at the end of 1H2020 calendar year, the demand had strengthened to 255 million kilometres, in 2H2020 it annualized to more than 500 million kilometers. It was not only better than H1, but also better than H2 of the previous calendar year.
Currently, demand in India is being driven by factors like growth of fixed broadband, replacement of BSNL’s ageing copper network by fiber optic cables (FOC), building an alternate network for defence, wireless backhaul network upgradation, and the need for higher speeds by broadband wireless access networks. In a year turned upside down by the COVID-19 global pandemic, the increased data consumption in both rural and urban areas and remote working have reiterated the essentiality of dense fiberization.
Apart from the increasing demand for OFC from the IT & telecom sector and the rising number of mobile devices, surging number of data centers is further anticipated to fuel demand. For instance, cloud companies are partnering with telecom operators to create edge datacenters. (E.g. Microsoft has tied up with Reliance Jio and Bharti Airtel has teamed up with Google Cloud.)
Low fiberization in India would have soon impacted service delivery. A tectonic shift in the fiberization landscape providing unlimited capacity and higher data speeds is imperative to complement the next-generation or 4G and 5G technologies. Considering the need to support bursting data from video on demand (VoD), Internet of Things (IoT), Artificial Intelligence (AI), Smart Cities and the likes, backhaul becomes a critical 5G concern. It will necessitate the requirement of such deep and intense fiberisation that would create unprecedented demand for cable, to a scale not witnessed in the last decade.
India has a network spanning 3 million fiber kilometres, expected to reach 5 million kilometres by 2024, assuming the National Broadband Mission’s targets will be realised.
India has an established backbone network connecting states with each other and the centre. While FOC network exists till the block level, backhaul network is yet to be brought to optical fiber cable network. Only about 31 percent of Base Transceiver Station (BTS) sites are connected on fiber network in the country, in contrast to global trends where more than 70–80 percent sites have OFC connectivity.
Also, almost 80-90 percent tower backhaul connections are still on microwave links and they do not offer support for higher bandwidth capacities. With increase in rural penetration, scarcity of spectrum is likely to increase further and consequently the demand of FOC for backhaul as well as BTS access will be on the rise.
With fiber deployment still characterized by significant capacity on the trunk and national long distance (NLD) routes, there is very little capacity in the access routes. Fiber-to-the-x (FTTx) and Fiber-to-the-home (FTTH) form a miniscule portion of an already limited fixed broadband access user base.
To elucidate, India has a FTTH penetration of 5 percent as against 95 percent in Singapore and 71 percent in Hong Kong, and a fiber per capita of just 0.1 km as compared to 0.9 in China and 1.4 in the USA.
China has a high density of optical fiber networks and is aggressively continuing to invest in new optical fiber infrastructure. By the end of 2016, 80 percent of China’s broadband connection was by fiber. By 2019, this figure reached 91 percent.
In October 2019, Indonesia completed final part of the Palapa Ring Project, a 13000 km project that brings high-speed internet to some of the poorest regions in the country’s eastern parts. The cable cost USD 540.18 million to build.
The current fiber footprint in India is contributed by the service providers, Reliance Jio, Bharti Airtel, Vodafone Idea, BSNL and MTNL; RailTel and PGCL; in addition to BharatNet that aims to deploy nearly 800,000 kilometres of fiber network separately. Other key users are the Indian Army and Navy; towercos; VSAT providers; ISPs; CATVs and MSOs.
BharatNet (the erstwhile National Optical Fibre Network), a project initiated in 2011 and funded by Universal Service Obligation Fund is to provide broadband, and connectivity to over 250,000 gram panchayats covering nearly 650,000 villages of India. Under the project, the government has laid OFC across 516,377 km in the country, covering 170,833 Gram Panchayats as on April 2, 2021, taking the total villages covered under the scheme to 158,124.
However, the government’s ambitious project is not without its problems. The project has missed several deadlines. The last deadline was March 2019. The revised timeline for completion of Phase-II of the project, August 2021, has now been extended to almost 18 months following the poor performance by states and BSNL.
RailTel, a Mini Ratna PSU, has a pan-India optic fiber network that covers all important towns and cities and several rural areas covering 70 percent of the population. The PSU has exclusive seamless Right of Way along 67415 km of railway track passing through 7321 stations across the country. Using this RoW, RailTel had, by March 2020 laid 56692 rkms of OFC and OFC lit is 53944 rkms. Works on another 4000 km are in various stages of execution. RailTel’s high speed OFC backbone network shall ultimately cover the entire railway route across the country.
BharatNet – 2021
|Implementation of the project is in two phases.|
|Phase-II (1.42 Lakh GPs excluding BHQs & including GPs over satellite media)·
|Last mile connectivity
through Wi-Fi and FTTH
|Service Ready GPs (Exc. BHQs)||Service Ready GPs (Inc. BHQs)|
|Private model (BBNL)||7381||7611||22721||7585||7357||7585|
|Miscellaneous & other newly created GPs||2517||2517||–||–||–||–|
RailTel is also providing managed services viz. building & maintaining the OFC network, manning and maintaining the Network Operation Centre, providing broadband and radio connectivity for State Wide Area Networks for the states of Rajasthan, Haryana, and Kerala. Last year, the PSU had laid OFC and done project work for ₹34.73 crore for BBNL.
Power Grid Corporation of India Limited, a Maha Ratna CPSE has created over 67500 km of OFC network connecting over 1000-plus locations across the country carrying traffic in multiple of 10G/100G in rings. The PGCIL OFC network covers all the important towns and cities of the country along with the hilly & difficult terrains of J&K and North Eastern Region.
The Indian OFC market is pegged at ₹6000 crore in 2020, poised to grow at a CAGR 19.7 percent to reach ₹16000 crore by 2024. STL dominates the segment and is the only vendor that saw a revenue increase of 13 percent in FY20 over FY19. Also, it has the highest percent of its turnover, 88.3 percent from optic fiber cables, albeit in FY20, ₹1779 crore was from exports. The company has been moving toward being an end-to-end solutions provider and integrator of digital networks from an optical fiber and optic fiber cables manufacturer only. HFCL too is emerging as a leading player, and has been making investments in upgrading its facilities and enhancing capacity. The MP Birla group, comprising three companies, Vindhya Telelinks Limited, Birla Cables Limited and Universal Cables Limited is also gaining a stronger foothold.
As the pandemic brought normal life to a standstill, 2020 established the power of digital networks beyond any doubt. With digital becoming the primary mode of human interaction, user penetration accelerated and network builders committed disproportionate investments. This triggered an unprecedented decade of network creation. As the new network drives connectivity to billions of unconnected users, 5G and FTTH have become mainstream. A new architecture emerged, based on 4 key technology confluences of wired and wireless, hardware and software, compute and connectivity, and at the edge. Recognizing these major shifts, STL focused on strengthening its core capabilities in optical solutions, network software, and system integration, while establishing new solutions in next-gen wireless access.
STL’s latest declared quarterly results, showed a strong third quarter (OND 2020) with continued QoQ growth. Revenue at ₹1314 crore, up 13 percent QoQ; EBITDA ₹238 crore, up 12 percent QoQ; PAT ₹87 crore, up 48 percent QoQ; and an order book of ₹10737 crores.
In 2019-20, STL Tech recorded its highest-ever revenue of ₹5154.4 crores with 65.48 percent being contributed by external customers within India and the balance from outside India. Revenue from two customers in India amounted to ₹2098.68 crores.
The company commercially launched new products for optical and wireless networks, setting the stage for disruptive growth in the 5G era. STL has committed ₹300 crores to expand its optical fiber cable capacity from 18 to 33 million fiber kilometers. This expansion is on track for completion by June 2021. The company has expanded its facilities to 50 million fkm for optical fiber.
HFCL has state-of-the-art optical fiber and optical fiber cable manufacturing facilities at Hyderabad, optical fiber cable manufacturing plant in Goa and in its subsidiary, HTL Limited at Chennai.
Indian OFC deployed
|BSNL (incl BharatNet)||800,000|
|*Navy, Towercos, VSAT providers, ISPs, CATVs and MSOs|
HFCL’s latest declared quarterly results, showed third quarter (OND 2020) revenue at ₹1277 crores as compared to ₹1054 crores in the 2QFY21, thus recording growth of 21 percent. EBITDA for the quarter stood at ₹177 crore as compared to ₹138 crore in 2QFY21. EBITDA margin increased by 78 basis points and stood at 13.8 percent for third quarter financial year 21. PAT rose to ₹85 crore up 59.7 percent QoQ. The order book is at ₹7300 crores. The capacity utilization inching higher, now stands at 95 percent for the cable manufacturing facilities, with contribution of ₹253 crores for the quarter.
The net consolidated revenue from operations during FY20 stood at ₹3838.91 crore as compared to ₹4737.79 crore in FY19. The total consolidated income in FY20 at ₹3861 crore was a decline of 19.2 percent over FY19. Consolidated EBITDA stood at ₹515 crore in FY20 from ₹458 crore in FY19, recording a growth of 12.45 percent, and consolidated PAT of ₹237 crore from ₹232 crore in the previous year was a growth of 2.16 percent. The company had a healthy consolidated order book of ₹8409 crores, equivalent to ~2.2 times FY20 revenue.
During the year, 2019-20, HFCL undertook various line balancing and debottlenecking measures at its Goa plant and Chennai facilities. The unit at Goa upgraded its ribbon OFC manufacturing infrastructure to over 2000 fiber count cables during the year. The Goa plant also received ISO 22001 for the Information Technology Service Management system and an ISO 27001 for Information Security Management systems. In its Chennai plant of HTL Limited, HFCL expanded its capacity from 7m fkm to 10.5m fkm during the year.
MP Birla Group has three companies manufacturing cables, Birla Cable Limited, Vindhya Telelinks Limited, and Universal Cables Limited. Birla Cable Limited’s latest declared quarterly results, showed third quarter (OND 2020) revenue from operations at ₹84.84 crore as compared to ₹67.55 crore in the 2QFY21, and ₹49.53 crore in 3QFY20. PAT rose to ₹0.29 crore in 3QFY21 over a loss of ₹0.57 crore in 3QFY20. For FY20, The net consolidated revenue from operations during FY20 stood at ₹223.07 crore, and PAT at ₹1.01 crore. Vindhya Telelinks Limited’s latest declared quarterly results showed third quarter (OND 2020) revenue from operations at ₹337.15 crore. PAT was ₹13.67 crore in 3QFY21. During FY20, the net consolidated revenue from operations stood at ₹1883.19 crore, and consolidated PAT of ₹126.89 crore. The company had a healthy consolidated order book of ₹8409 crore, equivalent to ~2.2 times FY20 revenue. Universal Cables Limited’s latest declared consolidated quarterly results, showed third quarter (OND 2020) revenue at ₹370.38 crore as compared to ₹283.71 crore in the 2QFY21, and ₹395.55 crore in 3QFY20. PAT was ₹8.51 crore in 3QFY21. For FY20, the net consolidated revenue from operations during FY20 stood at ₹1568.96 crore, and consolidated PAT of ₹64.55 crore.
The Indian OFC manufacturers are upbeat. With aggressive investments anticipated in digital network infrastructure and FTTH, phase II of BharatNet initiative to be executed, 70 percent-420000 towers to be fiberized, a lucrative export market available and the India 5G launch anticipated in 2023, it would not be an exaggeration to say that the OFC manufacturing is poised for a giant leap.
The government has set a target to lay 6.7 lakh kilometer of OFC, 1.2 lakh wifi access points, and 6.5 lakh fiber-to-the-home (FTTH) connections to be installed in 2021-22.
The finance ministry has allocated ₹9,000 crore to boost telecom connectivity across the country which includes high-speed OFC or satellite-based broadband services across the 220,000 lakh village panchayats.
In the Union Budget document, the Finance Ministry has earmarked an outlay of ₹5,200 crore to rollout the entire optical fiber cable required for setting up the defence communications network.
The OFC manufacturers need some government support and issues resolved to be able to deliver the much required deep fiberizations the country needs.
Some of the issues that need to be addressed are under the single window clearance system, the RoW Rules, November 2016 had set a mandate of a one-time charge of ₹1000 per km for laying fiber. The local authorities in many states however continue to levy hefty fees for granting permissions for laying fiber. The fee goes as high as ₹250,000 per annum. The industry estimate of overcharged amounts is close to ₹2600 crore due to various anomalies in RoW charges by State Governments so far. This needs to be resolved.
Indian OFC market – ₹crore
|Manufacturer||OFC revenue||Revenue from operations||Comments|
|Sterlite Technologies Limited||3982.53||4510.23||5154.40||5087.26||OFC is 88.30% of turnover|
|HFCL||576.38||3694.75||3838.91||4737.79||OFC is 15.6% of turnover|
|Vindhya Telelinks Limited||252.82||1404.58||1883.19||2095.37||Cables is 18% of total turnover, OFC alone is not available|
|Finolex Cables Limited||349.75||2498.20||2877.30||3077.79||Comm cables (OFC, optical fiber, coaxial, LAN, CCTV, speaker JFTC, PE and VSAT cables) are 14% of turnover, OFC alone not available|
|KEC International Limited||248.49||12424.66||11965.37||11000.53||2% of revenue of cables, including power, telecom (OFC, ADSS & PIJF), instrumentation & control and railway signaling cables, OFC alone is not available|
|Birla Cables Limited||144.72||268.494||223.07||502.31||OFC is 53.9% of turnover|
|Aksh OptiFiber Limited||119.57||271.813||300.39||530.06||OFC is 43.99% of turnover|
|Paramount Comm. Limited||39.57||488.465||606.20||614.46||OFC is 8.1% of turnover|
|Universal Cables Limited||1018.97||1230.941||1568.96||1416.55||Cables is 82.78% of turnover of company, OFC alone is not available|
The OFC manufacturers have requested for their inclusion on the list of segments that would receive benefits under the ₹12,195 crore PLI scheme for telecom equipment manufacturing. The scope of OFC production has been overlooked by the Centre and the industry is looking for course correction. PLI essentially helps ramp up production, not just for the Indian market but also for export. The scheme offers incentives depending on the quantum of investment.
The Ministry of Communications in the National Digital Communications Policy, 2018 had planned to create a National Fibre Authority to accelerate fiber deployment in the country. No progress has been made on that. It had also accorded optic fiber cables the status of public utility with emphasis on the fiber-first initiative with incentives and promotion of fiber connectivity for new residential and commercial developments. Funds to accelerate fiber deployments are essential.
Very recently, the finance ministry rejected a recommendation by the Directorate General of Trade Remedies (DGTR) under the commerce ministry to impose a 10 percent safeguard duty for one year on importing single-mode optical fiber. The safeguard duty is not country-specific, and a sudden surge in imports irrespective of a price drop is considered to be a fit case to safeguard interests of domestic industry. The fiber manufacturers are seeking protection, particularly in the wake of an anti-dumping duty imposed by China, on optic fiber imports from India. They claim that they are not able to compete with the imports and regain their market share, and have been forced to close down or keep part of their fiber production facilities idle.
The manufacturers are seeking at least a 5 percent benefit on sales volumes in each of the three verticals-preform, optic fiber, and optic fiber cable-on growth in sales from the base year (2019-20). They need government support to be able to indigenously design, develop, and manufacture products to be at par with the Chinese, Japanese, Vietnamese, and Taiwanese at their own game of passing on government benefits for export purposes. China has also had a Dual Circulation strategy that seeks to spur innovation to lessen dependence on the US for high-technology items.
The global fiber optic cable market is valued at USD 9236.5 million in 2020, expected to reach USD 20832.6 million by 2026, registering a CAGR of 14.5 percent during the period, 2021-2026.
The optical fibers are getting smaller and smaller to the deployment challenges being raised by end-use applications. As telecom operators started looking for high fiber count cables in reduced diameters, optical fiber and cable manufacturers invested in research and development to realize smaller fibers and cables. In April 2020, Prysmian becomes the first company to release a portfolio of cables that make use of optical fibers having a diameter of 180µm (micrometers). These cables are deployed for FTTx and 5G networks.
Moreover, in the past few years, cloud and content providers attempted to attract more users and offer reliable bandwidth-intensive services, thus, increasing the popularity of submarine infrastructure. There are about 350 submarine cables spanning 1.2 million kilometers connecting very close to 100 countries. The world of submarine cables is transforming rapidly, with USD 8 billion investments lined up over the next couple of years. The lifetime for submarine cable is expected to be about 25 years.
Just before COVID-19 struck, the amount of optical cable installed worldwide decreased from the previous year for the first time since 2002. The quantity installed in 2018 exceeded 500 million fiber-km for the first time but then decreased below 480 million fkm in 2019. With the pandemic refusing to relent, the situation may go from bad to worse in some applications.
The largest concentration of the fiber optics supply chain can be found in Wuhan, home to Fiberhome, YOFC, and Accelink, among other companies, which together comprise 25 percent of the global optical fiber production capacity. During the initial phase of the COVID-19 pandemic, there was major supply chain and market disruption.
15 largest fiber optic global companies. Based on their revenue, market cap, and net profit, leading players are listed.
Revenue: USD 49.9 billion; Market cap: USD 14.4 billion.
The largest fiber-optic company in the world is Sumitomo Corp, a Japanese general trading company founded in 1919. Sumitomo exports a wide variety of products from fiber optic cables and wires, to metals, textiles, and food products. Moreover, Sumitomo Corporation also participates in other ventures such as logistics, finance, and real estate development.
Most of Sumimoto Corporation’s revenues are generated outside of Japan. The company reported a net income of USD 2.7 billion and an asset of USD 77.1 billion in 2019, making Sumimoto Corporation the largest fiber-optic company in the world.
Kaile Science and Technology Co Ltd Hbe.
Revenue: USD 15 billion; Market cap: USD 12.1 billion.
Kaile Science and Technology Co Ltd Hbe is headquartered in Hubei, China, and was founded in 1982. Kaile is involved in the R&D, manufacturing, and selling of optical communication fibers, and optical cables, among others. Despite the numbers of Kaile performed in 2019, their reported net income decreased by 37 percent due to the unfavorable market conditions brought by COVID-19.
Revenue: USD 12.1 bn; Market cap: USD 28.337 bn.
Corning Incorporated manufactures a wide range of optical communications. Corning Incorporated is headquartered in New York and operates in 15 counties with more than 115 manufacturing facilities. Corning Incorporated generates more than half of its sales in the APAC region. Last year, Corning Incorporated recorded a net profit of USD 193 million and assets amounting to USD 28,898 million.
Revenue: USD 11.2 billion; Market cap: USD 8.436 billion.
The Milan-based Prysmian Spa is one of the largest fiber-optic companies in the world as it sells its products to Verizon and Siemens. Prysmian operates in 21 countries with over 50 plants and subsidiaries in 38 countries. They manufacture telecom cables and systems that make copper, optical, and fiber cables to transmit video, data, and voice files. Prysmian is well-known for making submarine and underground power cables that transmit high voltage current and high-speed broadband. In 2019, the company recorded a net income of USD 292 million.
Furukawa Electric Co Ltd.
Revenue: USD 8.27 bn; Market cap: USD 187.075 bn.
Furukawa serves 70 percent of the Japanese market, Asia, including China, and North America. They have been in the business of telecommunications (fiber optics and network equipment) for 125 years. In 2019, they reported USD 17,640 million net income and a total of USD 794,616 million assets.
Jiangsu Zhongtian Technologies Co., Ltd.
Revenue: USD 5.51 billion; Market cap: USD 33.45 billion.
Jiangsu Zhongtian Technologies Co., Ltd. or ZTT is one of the largest fiber-optic suppliers in the world. The company was established in 1992 and since then developed 1000 varieties of fiber optic communication and power transmission products. Jiangsu Zhongtian Technologies Co., Ltd. reported a net income of USD 279.9 million and assets of USD 5713 million in 2019.
Hengtong Optic-Electric Co Ltd.
Revenue: USD 4.6 billion; Market cap: USD 28.84 billion.
HTGD is a Chinese manufacturer of fiber optic cables listed as the 7th largest manufacturer in Integer’s 2017 Top 100 Global Wire and Producers. The company was founded in 1993 and headquartered in Jiangsu, China and engaged in telecom, power, and new energy sectors. Hengtong provides optical cable products for automobiles, submarines, and energy applications.
Revenue: USD 4.5 billion; Market cap: USD 2.48 billion.
CommScope is a fiber optic company based in North Carolina founded in 1977 that is engaged in manufacturing, designing, and building communication products such as wired and wireless networks. The company produces fiber optic and coaxial cables used by cable and satellite TV providers worldwide. CommScope Inc., has a USD 65.9 net income in 2019.
Fiberhome Telecommunication Tech. Co.Ltd.
Revenue: USD 3.51 billion; Market cap: USD 29.20 billion.
FiberHome Telecommunication Technologies Co. Ltd., is a tech company based in Wuhan, China founded in 1974 is focused on designing and manufacturing telecommunication products like OFC, wires, and integrated broadband access systems (IBAS). The company is one of the world’s top distributor of communication systems, IP data products, and optoelectronic devices. FiberHome recorded a net income of USD 139.11 million and total assets of USD 4476 million in 2019.
Revenue: USD 2.13 billion; Market cap: USD 1.78 billion.
Belden Inc., is an American manufacturer of high-speed electronic cables and networking products founded in 1902 by Joseph C. Belden. Belden reported 34 percent of their sales from producing and distributing OFCs, flat cables, coaxial cables, and peripheral equipment
The company started profiting from selling silk-wrapped magnetic wires needed for telephone coils to shifting focus to emerging technologies with internet and intranet products in 1990, Belden Inc., is one of the biggest names in the fiber optic industry. Last year, Belden Inc., reported a net income of USD 109.65 million and total assets of USD 3407 million.
Yangtze Optical Fibre and Cable JSC Ltd.
Revenue: USD 1.10 bn; Market cap: USD 18.038 bn.
Yangtze Optical Fibre and Cable Joint Stock Limited Company were founded in 1988 in Wuhan, China. YOFC is one of the most popular manufacturers and global distributors of optical fiber and cable products.
The company also provides telecom operators, cloud and data centers, smart campuses, rail transport, education, power grids, consumer electronics, and government solutions. The assets of YOFC in 2019 is recorded at USD 1104 million.
Futong Technology Development Hldgs Ltd.
Revenue: USD 848.77 mn; Market cap: USD 168.075 mn.
Futong is a Hong Kong-based optical fiber company founded in 1999 and has operating facilities in more than 20 centers in China is focused on wholesale distribution of IT products, services, and computer software. Futong Technology Development Holdgs Ltd reported a net income of USD 2.87 million in 2019 and has USD 727.5 million assets.
Sterlite Technologies Limited.
Revenue: USD 703.73 mn; Market cap: USD 64.47 billion.
Sterlite Technologies Ltd is a global technology company founded in 1988 and based in Pune, India, and has manufacturing facilities in China and Brazil. STL is one of the top integrators of digital networks engaged in designing, building, and managing smarter digital systems such as optical fiber, cable, and jelly-filled telecom cable products. Sterlite Technologies Ltd reported a net income of USD 703.73 million and an asset amounting to USD 1001 million in 2019.
Tongding Interconnection Information Co Ltd.
Revenue: USD 502.96 mn; Market cap: USD 5.952 billion.
Tongding is located in Suzhou, Jiangsu, China, and is one of the top leading fiber optics companies in the world. Tongding is mainly involved in the development and delivery of communication cables and optical fibers. The company’s principal products include optical fibers, optical communication cables, split optical fiber boxes, and optical fiber distribution frames to mention a few. Tongding Interconnection distributes its products overseas and China as its main market. Tongding Interconnection Information Co Ltd reported an asset amounting to USD 1215 million in 2019.
Revenue: USD 10.63 mn; Market cap: USD 112.894 billion.
Fujikura Ltd. is a Japanese company founded in 1885 and is headquartered in Tokyo primarily engages in the development and export of resources, information and communication, electronics, and automotive goods, as well as in the provision of related services. Fujikura produces optical fiber cables and coaxial cables worldwide. The company also manages a real estate leasing business.
The global fiber optics market was valued at USD 6.81 billion in 2020 and expected to reach USD 9.91 billion by 2027, with a CAGR of 4.6 percent. A type of optics which uses glass threads to transmit data, fiber optics consists of a bundle of glass threads. Each of these glass threads in fiber optics is capable of transmitting messages modulated onto light waves.
The size of the global market for optical fiber preform, a kind of silica glass rod which has a special refractive index of profile used to produce optical fiber is projected to reach USD 3.72 billion by 2026, from USD 2.65 billion in 2020, at a CAGR of 5.8 percent during 2020-2026. From 2018 to 2019, the growth rate of fiber optic preform slowed down, and major manufacturers further reduced product prices, maintained product coverage, and gradually increased product penetration. Due to the impact of the COVID-19 in 2020, the market experienced negative growth.
Key players include Corning, Prysmian, Shin-Etsu, Furukawa Electric, Sumitomo Electric, Hengtong Optic-Electric, Fujikura, OFS Fitel, Fasten Group, Fiberhome, Futong, and Zhongtian Technology.
The fiber optic components market was valued at USD 16.55 billion in 2019 by ResearchAndMarkets, projected to reach USD 39.15 billion by 2027; expected to grow at a CAGR of 11.27 percent from 2020 to 2027.
Asia Pacific dominated the segment with a share of 35.8 percent in 2019, followed by North America. In March 2018, the consortium of APAC network operators signed a contract with NEC Corporation, to design a submarine cable, SJC2, which connects Japan, Thailand, Singapore, Hong Kong, Cambodia, Vietnam, Taiwan, China, and Korea. Several companies including Chuan Wei, China Mobile International, Chunghwa Telecom, Singtel, KDDI, SK Broadband, VNPT, and Facebook contributed to the SJC2 cable.
In 2019, North America stood second in the fiber optic components market and it is anticipated to witness a steady CAGR from 2020 to 2027.
The region hosts several technological giants that invest significant amounts in the development of robust technologies. The government’s focuses on investing in telecommunication infrastructure, growing industrialization and infrastructural development are key drivers.
Companies are adopting inorganic market strategies to expand their footprints across the world and meet the growing demand. The fiber optic components market players mainly focus on the acquisition strategy to expand their business and maintain their brand name globally.
For instance, in 2020, Fujitsu Optical Components Limited (FOC) introduced compact and low power consumption 400Gbps ZR transceivers. These transceivers are compliant to the Optical Internetworking Forum (OIF) Implementation Agreement 400ZR for cloud data center interconnects (DCI) of up to 120km transmission.
The COVID-19 outbreak has created significant disruptions in the construction sector. The production shutdowns, restrictions on supply chain, procurement management, labor scarcity, and border lockdowns have slowed down construction and is directly affecting the adoption of various technologies and solutions, leading to a reduced spend on telecom companies, thereby impacting demand for fiber optic components.
The fiber optics testing equipment (FOTE) worldwide market generated revenues worth USD 283 million in 2020 and is expected to grow to USD 433 million by 2025, at a CAGR of 8.8 percent. Acquiring better speed in data transfer applications has been a major contributor.
Fiber optics testing, used for analyzing the performance of several fiber optic components such as receivers, splices, detectors, connectors, laser or LED sources, and fibers use equipment as OTDR, OSA, DWDM, OTDR, OLS, OPM, OLTS, and RFTS. The specification and performance of the components are tested in order to determine their working capacities.
Apart from telecommunication, defense, military & aerospace, oil & gas, and cable television; the rising penetration of fixed broadband subscriptions, growing LTE networks, and sprouting number of data centers are fueling market expansion. However, telecom is expected to hold the largest market share.
Fiber optics cabling is the core element of the industry. As the demand for improved network speed and bandwidth increases, it is necessary to minimize the limitation of throughput drop and bandwidth loss. High performance data transfers, use of digital technologies, and the growing number of multimedia and business services contribute to the growth of the market.
Growing demand for FTTX solutions and escalating investments toward developing 5G infrastructure have increased the adoption of fiber optics testing solutions across the globe. For instance, the UK government is planning to invest over USD 52.28 million in 5G testing in the coming years. The lack of skilled technicians is one of main restraints impacting the growth of the market. Moreover, high maintenance costs coupled with high initial investment are other restraints existing in the FOTE market.
North America currently accounts for significant market share and is expected to register consistent growth. Availability of advanced telecommunications infrastructure along with rising adoption of high speed data transfer solutions are augmenting the regional demand for fiber optics testing methods.
Asia-Pacific fiber optics testing market is slated to record highest CAGR through 2026, primarily due to escalating investments toward 5G infrastructure development.
The competitive landscape of this market is defined by Fluke Corp., L3Harris Technologies, Fujikura Ltd., EXFO, Eurofins Scientific, Viavi Solutions Inc., The TÜV Rheinland Group, Intertek Group plc, NTS, Element Materials Technology Ltd., and UL LCC. Also aggressive are Anritsu, Agilent Technologies, JDS Uniphase, Corning, Keysight Technologies, Tektronix, Kingfisher International, okogawa Electric Corporation and Exfiber Optical Technologies.
The various vendors of test equipment are in an intense competition to keep the price of their product low and at the same time enhance the performance of product. Moreover, the vendors are also focusing on providing technical support and specialized customer service to stay ahead in the competition.
Post-COVID-19, manufacturers are gradually realizing the importance of fiber optics testing more than ever. But due to the lockdown across countries, companies are facing severe cash flow issues and are deferring new projects related to the implementation of fiber optics testing in their factories.
The ongoing COVID-19 pandemic has caused disruptions in economies and supply chains, thereby causing companies operating in different industries to adopt a global supply chain model. A number of manufacturing companies have halted their production, which has collaterally damaged the supply chain and negatively impacted the fiber optics testing market.
With different markets, where North American market has seen continued growth in deployment, we have seen China market turning a corner and is seeing growth in volumes on the back of the 5G base station deployments. Europe is improving on back of the FTTH activity, while at the same time, the second wave of this pandemic has acted a bit of a dampener in terms of the demand recovery in the current quarter.
The current focus is different because investment shift is also coinciding with the technological confluences which is happening. A distinct shift which is happening is that the new age networks are no longer wireless separately or optical separately. These are converged networks. So, the 5G networks are as much fiber networks and vice versa rather than it becoming one or the other. 5G networks build-out is coinciding with fiber to the cell, fiber to the home, and fiber to the enterprise networks. It is coming together to provide this high-speed connectivity.