Fiber Optic Cable Market Recovery by pok77069


									        Wire & Cable Economics

     Philip Radbourne, Analyst
     Integer Research Ltd.
                                                                  Fiber Optic Cable
     55 Farringdon Road
     London, EC1M 3JB, United Kingdom
                                                                  Market Recovery

During 2007, there have been many articles discussing         loop from companies such as Verizon has also helped
the recovery in the fiber optic cable market worldwide.       underpin the global market.
The market has been driven by increased demand for
                                                              In response, most of the leading companies have started
a range of broadband services. The so called “digital
                                                              investing back into their fiber optic cable divisions.
natives”—the twenty-something’s who are spending
                                                              Corning even brought back some optical fiber capacity
increasing amounts of time on social networking sites,
                                                              in the USA this year. This was a direct response to an
uploading and downloading content, are really driving
                                                              increase in optical fiber and fiber optic cable shipments
bandwidth demand. In some cases, bottlenecks in tele-
                                                              in 2007. Draka also increased capacity at its Claremont,
com networks have started to appear, and this had fed
                                                              NC, optical fiber operation in the USA. The company
through to increased investment worldwide in fiber optic
                                                              reported that it has seen volume growth of 14% year-
networks, notably in the local loop (FTTH).
                                                              on-year in the first half of 2007, mainly driven by growth
Integer Research estimates that demand for fiber              in the single-mode fiber segment and continued healthy
cable increased globally by 11% year-on-year in the           growth in data communication cable.
first half of 2007. Shipment volumes from the upstream
                                                              We should also make special mention of Furukawa
suppliers of optical fiber around the world have been
                                                              Electric. It had reported losses at its subsidiary OFS
inching up steadily quarter-by-quarter over the last 18
                                                              over the last few years, but the operations in the USA
months. Indeed, we are now some way from the terrible
                                                              returned to profitability in 2006, and have continued
conditions of 2002, and the lackluster markets of 2003
                                                              that trend in 2007. Domestically, Furukawa Electric has
and 2004. However, prices and margins worldwide still
                                                              seen orders from the leading Japanese telecoms pick
reflect that the market is still competitive, certainly for
                                                              up again through Q2 and Q3 2007, after a bumpy start
optical fiber.
                                                              to the year. It also reported strong sales from Brazil and
It now looks like the demand in 2007 could well reach         Thailand in particular. Indeed, Furukawa has announced
97 million fiber-km. An increase in investment in install-    that it plans to increase capacity at its operations in
ing fiber optic cable in the local loop (FTTH), combined      Germany and Russia through 2007. Certainly, it will be
with the demand for faster VDSL 2+ connections has            interesting to see if this trend of increased shipment
underpinned this growth. In particular, the European          volumes feeds through to stronger margins, and whether
market has shown some impressive growth rates. In             wire and cable companies telecom divisions can start
Asia, the Chinese and Indian markets have continued           making as strong a contribution to the bottom line as
to expand strongly during the year. Additionally, in the      their specialty wire and cable operations have been
USA demand for fiber optic cable deployed in the local        doing in the last 18 months.                        WCTI

xx     Wire & Cable Technology International/November 2007

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