Global fiber optic cable shortage threatens digital growth

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A global shortage of fiber optic cables has driven up prices and lengthened delivery times, jeopardizing companies' ambitious plans to deploy state-of-the-art telecommunications infrastructure.

Europe, India and China are among the regions hardest hit by the crisis, with fiber prices increasing by up to 70% from record highs in March 2021, from $3.70 at $6.30 per kilometer of fiber, according to Cru Group, a market intelligence firm.

Although the pandemic has prompted some of the largest technology and telecommunications groups to cut capital expenditure, there has been an increase in demand for internet and data services, leading to a shortage of availability of crucial equipment but often overlooked.

Companies such as Amazon, Google, Microsoft and Facebook-owner Meta are expanding their data center empires to meet growing demand, including installing vast international fiber networks under the ocean. In the meantime, governments have set ambitious targets for the deployment of very high speed and 5G, both of which require the laying of large quantities of fiber optic cables underground.

"Given that the cost of deployment has suddenly doubled, there are now questions about whether countries will be able to meet the targets set for building infrastructure, and whether this could have an impact on global connectivity" , said Michael Finch, an analyst at Cru.

Total cable consumption increased by 8.1% in the first half of the year compared to the same period last year, according to Cru estimates. China accounted for 46% of the total, with North America being the fastest growing region at 15% year-over-year.

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The shortage is underpinned by rising prices for some of the critical components that go into fiber optic technology, in which light is carried along flexible fibers with a glass core.

There has been a shortage of helium, a crucial component in the manufacture of fiber optic glass, partly caused by factory outages in Russia and the United States, which have led to price increases of the item by 135% in the past few years. two years. Meanwhile, prices for silicon tetrachloride, another key component in fiber production, have risen by up to 50% according to Cru.

"In my professional career, I've never seen anything like this inflationary crisis," said Wendell Weeks, chief executive of Corning, the world's largest producer of fiber optic cables, which has played a important role in the invention of technology. in 1970.

Weeks added that the company is increasing production to meet growing demand from governments, telecommunications companies and Big Tech groups, including building new facilities in the United States and Europe.

Fiber prices have now reached their highest level since July 2019, according to Cru, although North America has been less affected than Europe, China and India.

Weeks said that in the United States, prices only rose 2% in 2022 and had otherwise fallen every year since 2012. "It's going to continue to be tight for a while, but we will overcome this. hyper-crisis,” he added.

Martijn Blanken, managing director of Exa Infrastructure, an international digital infrastructure company, said fiber prices have risen by at least 20% over the past six months and that "in some cases, it's so erratic that you have to check it every day." .” "We add cl...