Warning: Fiber optic cable prices soar, facing shortage crisis

A global shortage of fiber-optic cables has pushed up prices and lengthened delivery times, jeopardizing companies’ ambitious plans to roll out state-of-the-art telecommunications infrastructure, the Financial Times reported.

Data from market intelligence firm Cru Group shows that Europe, India and China are the regions hardest hit by the crisis, with fiber prices rising 70% from a record low in March 2021, from $3.70 per fiber kilometer to $6.30.

While the pandemic has prompted some of the largest technology and telecoms groups to cut capital spending, a surge in demand for internet and data services has led to a lack of availability of critical but often overlooked materials.

Companies such as Amazon, Google, Microsoft and Meta, the owner of Facebook, are expanding their data center empires to meet soaring demand, including laying vast international fiber-optic networks under the sea. At the same time, governments have set ambitious targets for rolling out superfast broadband and 5G, both of which require laying vast tracts of fiber-optic cables underground.

“Given that deployment costs have suddenly doubled, there are now questions about whether countries will be able to meet the targets they set for infrastructure rollout, and whether this will have an impact on global connectivity,” said analyst Michael Finch.

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

The shortages are caused by rising prices for some key components in fiber-optic technology, in which light is transmitted through flexible optical fibers with a glass core.

Shortages of helium, a key ingredient in fiber-optic glass manufacturing, due in part to factory shutdowns in Russia and the U.S., have caused the element’s price to rise 135% over the past two years. Meanwhile, prices for silicon tetrachloride, another key ingredient in fiber production, have risen 50%, according to Cru.

“I’ve never seen an inflation crisis like this in my career,” said Wendell Weeks, chief executive of Corning, the world’s largest producer of fiber-optic cables, which played a key role in inventing the technology in 1970.

Weeks added that the company was increasing production to meet surging demand from governments, telecoms firms and big technology groups, including building new facilities in the United States and Europe.

Fiber prices are now at their highest level since July 2019, according to Cru, although North America has not been hit as hard as Europe, China and India.

Weeks said U.S. prices rose just 2% in 2022 and have fallen every year since 2012. “It’s going to continue to be tight for a while, but we’re going to get through this super crisis,” he added.

Martijn Blanken, CEO of international digital infrastructure company Exa Infrastructure, said fibre prices had risen by at least 20% in the past six months and that “in some cases it’s so volatile that you need to check it every day”. “We add clauses to our customers so that we are not responsible for these price increases,” he added.

This resulted in a significant increase in lead times for certain fiber products, extending from 20 weeks to nearly a year for many smaller customers.

Ankit Agarwal, managing director of STL, one of the UK's largest fiber suppliers, said: "We are all prioritizing the fastest delivery to our largest customers."