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The scale is smaller and the price is higher. Has the optical fiber and cable industry started to recover?

More than three months have passed since China Telecom announced the prequalification of outdoor optical cable procurement projects in 2020. Although we are still doubting whether centralized procurement will proceed as usual, China Telecom announced that the centralized procurement project had won the bid before the tender. The end of 2020. candidate. 22 manufacturers including Zhongtian, Fortis, YOFC, Hengtong and the fire five giants won the bid.

When we see the quotations of various manufacturers, we wonder whether the unit price of optical fiber has dropped again? However, according to people familiar with the matter, the scale of this centralized procurement has been slightly adjusted, and the 75 million core kilometers announced during the prequalification period have been adjusted to 45.5 million core kilometers. According to overall estimates, the unit price is higher than that of China Mobile’s ordinary optical cable series this year.

Need to establish a healthy industrial environment

It is not clear why China Telecom adjusted the scale of centralized procurement, after all, it has reduced the scale by nearly 40%. However, the rebound in prices has also made people full of confidence in the industrial chain and laid the foundation for the optical fiber and cable industries to return to a healthy industrial environment. China Telecom has been committed to promoting the healthy development of the industrial chain.

As the infrastructure for carrying 5G networks, fiber optic cables are an essential part of 5G. Therefore, the industrial chain is more necessary to create a good industry competition environment to ensure the high quality of the industry. After all, 5G carries the historical mission of the Internet of Everything and requires reliable network support. In addition, this is also important for the optical cable industry, because the recovery cycle of the optical cable industry is very slow.

With the accelerated development of “new infrastructure” such as 5G, big data centers and artificial intelligence, a new round of demand for optical fibers and cables is real. Some research institutions pointed out that during this year’s fiber price decline, the supplier’s production capacity will continue to be cleared, and the relationship between supply and demand will gradually improve in the future. At this time, if a good industrial environment can be established, it will promote the healthy development of my country’s communications industry and will also bring positive benefits to the fiber optic cable industry.

CRU also pointed out that although FTTx-related demand continues to weaken, China still needs to accelerate the construction of new infrastructure such as 5G and big data centers at the policy level, and the three major domestic operators have also greatly increased capital expenditures related to 5G content. . These are used for optical cables. Demand growth provides further upside.

At the same time, CRU predicts that by 2021, the epidemic will be under control, the global economy will return to normal, operators’ fixed-line and 5G construction will be on track, and global demand for optical cables is expected to increase by 7%. At the same time, driven by the ubiquitous optical fiber network, the demand for optical fiber cables will maintain a relatively stable growth in the next few years. This also means that as demand increases and prices gradually rise, the optical fiber and optical cable industry may usher in a new round of development.

Manufacturers need to firmly open up new tracks

Although the slight increase in prices is a positive signal for manufacturers, the price of optical cables at this stage is still at a low level and will remain low in the short term, which poses a major challenge to manufacturers’ profits. Therefore, manufacturers need to carry out a new strategic layout to improve quality and efficiency.

In recent years, in the face of falling prices, optical fiber and cable manufacturers are also undergoing self-transformation. While they have performed well in traditional optical fiber and cable businesses, they are also developing into high-value businesses. On the one hand, continue to carry out product innovation, continuously improve research and development capabilities, upgrade process flow, and reduce costs, such as G.654.​​E, special optical fibers, etc.; on the other hand, expand the field, such as participating in 5G fronthaul competitions. At present, many optical fiber and optical cable manufacturers have participated through self-research or mergers and acquisitions, and have obtained a good share in the collective procurement of optical modules by groups and provincial-level companies.

In addition, 5G opens the era of Internet of Everything. Optical fiber and cable manufacturers are also actively exploring vertical industry markets to take advantage of self-produced products to provide end-to-end network solutions and enhance digital media capabilities.

Post time: Dec-23-2020
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