Transition to 5G drives demand for fiber

A new report released by IndexBox: "World – Fiber Optic Cable – Market Analysis, Forecast, Size, Trends and Insights". Below is a summary of the key findings of the report.

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As countries implement 5G networks, the increase in demand is expected to significantly boost the optical fiber market to 1.5 million tons by 2030. The new generation of mobile broadband will require the establishment of a dense network of base stations connected by fiber optic cables. In the near future, the United States, China, Japan, and the European Union will be the most profitable markets for optical fiber sales and distribution.

Key Trends and Insights

With the full rollout 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 very long distances. Fiber optics is the only alternative because it is the only effective cable material that provides the necessary high data transmission rates. As a result, demand for optical fiber is expected to soar, and the global optical fiber market may reach 1.5 million tons by 2030.

The United States, China, and Japan show the greatest potential for fiber consumption as they emphasize developing infrastructure for fifth-generation networks. The United States is likely to become the largest fiber consumer due to its territorial size. Saudi Arabia, the European Union, and Australia are also actively implementing 5G technology.

Currently, China has installed about 70% of the world's base stations, making it the largest fiber consumer in 2020, reaching 135,000 tons, and leading all other countries in the speed of 5G implementation. 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 125,000 tons of consumption in 2020. The Biden administration announced that it will allocate $100B to develop broadband access infrastructure over its eight-year plan. This should accelerate the expansion of 5G network coverage in the country.

The Japanese government has declared the implementation of 5G one of the government’s highest priorities, and Japanese telecommunications companies plan to invest more than $14B in the infrastructure of 5G networks, including base stations, server equipment, and optical fiber.

Fiber is ideal for achieving the high performance that 5G claims, as it offers more than 1,000 times the bandwidth of copper links. The lack of alternatives and overall demand for fiber will make this part of the cable industry increasingly attractive for investment.

Global fiber optic cable consumption

In 2020, the global optical cable market fell for the first time since 2017 by -3.9% to $13.7B, thus ending a two-year upward trend. However, overall, consumption continued to show a relatively flat trend pattern. The growth rate was most pronounced in 2018, with a year-on-year increase of 9.7%. During the review period, the global market reached a peak of $14.4B in 2012; however, from 2013 to 2020, consumption failed to regain momentum.

In 2020, the countries with the highest optical cable consumption were China (135,000 tons), the United States (125,000 tons) and Mexico (61,000 tons), accounting for a total of 31% of global consumption.

In terms of value, the United States ($2.3 billion), China ($1.4 billion), and France ($788 million) were the countries with the highest market value in 2020, accounting for 33% of the global market.

The countries with the highest per capita consumption of optical fiber and cable in 2020 were France (625 kg per thousand people), Türkiye (486 kg per thousand people) and Mexico (453 kg per thousand people).

Global fiber exports

Overseas shipments of optical fiber cables in the global market grew for the ninth consecutive year, increasing by 6.7% to 596,000 tons in 2020. In terms of value, optical fiber cable exports contracted to $6.8 billion in 2020 (IndexBox estimates).

China dominated the structure of fiber optic cable exports, with exports of 344,000 tons, close to 58% of the total exports in 2020. Mexico (46,000 tons) ranked second in total exports, accounting for 7.7%, followed by the United States (6.7%). The following exporting countries - Poland (13,000 tons), Spain (12,000 tons), South Korea (12,000 tons), Germany (12,000 tons) and Romania (11,000 tons) - each accounted for 10% of the total exports.

In terms of value, the world's largest suppliers of fiber optic cables are China ($200 million), the United States ($100 million) and Mexico ($702 million), which together account for 55% of global exports. They are followed by Poland, Germany, South Korea, Romania and Spain, which together account for 14%.

The average export price of optical cables in 2020 was $11,350 per ton, down -16.8% from the previous year. From 2012 to 2020, the UK had the most significant price growth rate, while import price data for other leading global countries showed different trends.