Fiber Optic Cable

Report Overview

Featuring 19 tables and 13 figures – now available in Excel and Powerpoint! Learn More

This study analyzes US supply of and demand for fiber optic cable products. Major product types covered are:

• single mode
• multimode

Excluded from the scope of the study are bare wire and other types of noninsulated wire products, as well as complete wiring harnesses and wiring sets (although separately sold wire utilized in such products is included).

Historical and forecast sales are also provided for major end use markets, including:

• telecommunications, including backbone and last-mile applications
• construction and other markets (e.g., motor vehicles, aerospace)

Historical data (2010, 2015, and 2020) and forecasts for 2025 and 2030 are provided in millions of dollars for demand, shipments, and net exports.

Impact of COVID-19 Pandemic on Fiber Optic Cable

Demand for fiber optic cable was flat in 2020, although the impact of the COVID-19 pandemic contributed significant volatility during the year. Many suppliers reported poor sales performance in the second and third quarters, followed by rebounds in the fourth quarter. Performance also varied considerably by application.

In particular, market performance was sustained by rising investment in infrastructure to support 5G technology, as the large-scale rollout of 5G began in mid-2019. This process proceeded throughout 2020, as the pandemic did not significantly alter timelines for the introduction of 5G services by telecommunications providers. However, the economic uncertainty during the pandemic did limit capital spending by telecommunications firms to an extent.

The widespread shift toward remote work also altered data traffic patterns, with traffic in networks in residential areas jumping substantially.

However, investment in telecommunications networks to support offices and other commercial buildings was negatively impacted by both remote working trends and economic uncertainty.

Market performance for fiber optic cable is expected to pick up in 2021 as a stronger economic environment allows for greater capital outlays in telecommunications infrastructure. The ongoing rollout of 5G will also continue to support demand throughout the near future.

Supply & Demand

Fiber optic cable demand is projected to advance 3.0% per year to $3.6 billion in 2025. Growth will moderate in comparison to that seen between 2010 and 2020, as the market for fiber optic cable in telecommunications backbone applications has matured. However, investment in infrastructure for 5G (5th Generation) mobile communication networks will support sustained high levels of demand as this process stretches over the next decade. Healthy gains in demand are also expected for fiber optic cable in last-mile, in-building, and information processing applications.

Average prices for fiber optic cable are expected to decline slightly through 2025, and the cost differential between fiber and coaxial cable will continue to shrink. This factor will support the trend toward last-mile fiber, although fiber optic cable will remain a small portion of demand in this application in the near term.

Shipments of fiber optic cable are forecast to rise 3.0% per year to $3.4 billion in 2025. Growth will be spurred by rising local demand and increased exports to Canada and Mexico, the leading external destinations for US suppliers.

The US has historically been a net exporter of fiber optic cable, but that has shifted in recent years, with the country posting trade deficits in both 2018 and 2020. It is expected that the US will remain a net importer of these products going forward:

• Growth in the trade deficit is expected to be driven by rising imports from Mexico, which accounts for over half of US fiber optic cable imports.
• China also historically represented a large and growing share of US imports until the Trump administration imposed a 25% tariff on fiber optic equipment in 2019:
  • It is unlikely that Chinese fiber optic cables will increase their market share through 2025, as the EU accused China of flooding the market with unfairly low priced glass fibers in 2020.
  • The combination of these tariffs makes it unlikely that suppliers will source a growing share of demand requirements from Chinese suppliers.

Demand by Type

Fiber optic cable demand is projected to advance 3.0% per year to $3.6 billion in 2025. Single-mode products will remain the bulk of demand, accounting for 73% of sales.

Fiber optic cable has many advantages over the conventional copper-based coaxial and unshielded twisted pair wires that it competes with, and this will support market growth. These advantages include:

• higher bandwidth capabilities
• longer transmission distances
• immunity to EMI and RFI
• higher reliability and security
• lower maintenance costs

In addition, as communication systems improve, fiber optic cable can often be easily converted to newer, higher capacities by changing network and line terminals that house the laser transmitters, rather than by relaying cables.

Competitive Products

Fiber optic cable primarily competes with copper-based coaxial cable and multiconductor cable, with these three products together accounting for 73% of telecommunications market wire and cable demand in 2020. Between 2010 and 2020, fiber optic cable made significant market share gains at the expense of copper-based products, rising from 30% of the telecommunications market in 2010 to 51% in 2020.

Fiber optic cable dominates competing products in terms of data transmission capabilities and has significantly less signal loss over distance. As a result, fiber optics have largely replaced copper products in the telecommunications backbone. Lower costs represent the primary remaining advantage allowing coaxial and multiconductor cable to continue to find use. Typical telecommunications infrastructure uses both fiber and copper-based cable, with copper representing the bulk of the last-mile network. Copper-based products are also used as part of local area networks in commercial buildings.

Going forward, fiber optic cable is expected to continue gaining market share, with both coaxial and multiconductor cable underperforming:

Demand for fiber optic cable is forecast to increase 3.0% per year to $3.6 billion in 2025. Sales will be supported by:

5G to Sustain Demand Throughout 2020s as Infrastructure Improves

The large-scale commercial rollout of 5G in the US began in mid-2019 and significantly increased in 2020. By the end of 2020, around 75% of the US population lived in areas with at least some 5G coverage, and this figure is expected to exceed 80% in 2021. However, 5G networks remain underdeveloped, and it is estimated that only around 10% of mobile devices in the US are 5G activated as of mid-2021. Significant further investment will be required before 5G networks will be able to perform at an adequate level for universal adoption.

The main driver of fiber optic cable demand in 5G networks will be densification efforts, under which large numbers of small cell nodes will be constructed and connected to broader networks. In high usage areas, it is estimated that 5G networks will ultimately include dozens or even hundreds of cells per square mile, all of which will require fiber optic cable.

While the 5G rollout will be a major ongoing source of fiber optic cable sales going forward, it is not expected to produce particularly rapid short-term growth. The construction of small cell networks is an expensive, labor-intensive process, and it is unlikely to be compressed into a short period. Instead, construction and improvement of these networks will continue throughout the 2020s. In addition, the maturity of the conventional telecommunications backbone segment will offset 5G-related gains to an extent.

Proliferation of Internet-Enabled Devices Spurring Sales

Growth in bandwidth requirements for telecommunications will be accelerated by the increase in data-enabled devices associated with the Internet of Things. The prevalence of features supported by internet connections is expanding rapidly across a wide variety of devices and applications, with building automation representing a particularly promising area. As appliances, HVAC systems, security systems, and the like increasingly rely on internet connections, data requirements will intensify in both residential and commercial settings, spurring ongoing investment in telecommunications networks.

Last-Mile Fiber Growing Rapidly from Small Base

While last-mile fiber represents a minor share of demand at present, demand growth is expected to be well above average through 2025. These services are still not available in many parts of the US, and expansion of geographic availability will allow providers to reach new customers throughout the country. However, this is likely to remain a luxury option, and last-mile fiber is not expected to become ubiquitous in the near future.

• • investment in infrastructure to support the rollout of 5G networks
  • ongoing increases in data traffic in both residential and commercial settings
  • increased penetration of last-mile fiber
• However, because the substitution of copper with fiber in the telecommunications backbone has mostly been completed, the difference in market performance between fiber and competing products is not expected to be as large from 2020 to 2025 as it was in the 2010-2020 period.