Fiber Optic Cable Industry Development Can Be Expected in 2023
In 2022, the State Council proposed to accelerate the construction of information network infrastructure; orderly promote the expansion of backbone networks, and collaborate to promote the construction of gigabit fibre-optic networks and 5G network infrastructure.
China's optical fibre cable production of 346 million kilometres in 2022
In March 2021, the Ministry of Industry and Information Technology (MIIT) proposed to expand the coverage of gigabit optical networks, accelerate the deployment of 5G independent group networks on a large scale, deeply promote the construction and upgrading of rural network infrastructure, and deepen the common construction and sharing of telecommunications infrastructure. By the end of 2021, more than 20 gigabit cities will be built nationwide, and by the end of 2023, more than 100 gigabit cities will be built nationwide, achieving a gigabit optical network coverage rate of more than 80% for urban households and more than 12 5G base stations per 10,000 people, ushering in a new wave in the development of the fiber optic cable industry.
The latest data from the National Bureau of Statistics shows that the cumulative output of China's optical fiber cable for the year 2022 was 346 million kilometres, with a cumulative increase of 6.6% in optical fiber cable output. The length of new fibre optic cable lines was 4.772 million kilometres, with the total length of fibre optic cable lines across China reaching 59.58 million kilometres.
In recent years, the laying of fibre optic cables in China has been mostly completed, and the internet penetration rate has reached 73% in 2021. By June 2022, internet penetration reached 74.4%. Although the market demand is still growing under the Chinese government's 5G, and gigabit network construction, the compound growth rate is gradually slowing down.
In 2022, the global optical communication market is driven by 5G, cloud computing, data centres, FTTH and other multi-industry applications, driving regional demand for fibre optic cables to achieve sustained growth, with emerging markets in Europe, South Asia, ASEAN, Latin America and other regions expected to reach a growth rate of more than 5% in fibre optic cable demand.
Fiber Optic Cable Industry Development Can Be Expected in 2023
The optical fibre industry is highly cyclical, with the industry's development highly correlated with the investment efforts of telecoms operators. 2000 saw the bursting of the optical communications bubble and the industry fell into a 10-year trough. 2010 saw a golden decade for the industry with the implementation of the "Broadband China Strategy" and the successive construction of 3G and 4G.
However, from 2019 onwards, the optical fibre industry entered into a tailspin with the construction of broadband and 4G, with the release of production capacity resonating with the lack of demand and the rapid dive in fibre prices. 2020 saw operators collect optical fibre at half price and then 20% discount compared to previous years, leading to difficulties for some optical fibre and cable manufacturers. Until the fourth quarter of 2021, with China Mobile common fiber optic cable collection volume and price rise, the industry ecology began to repair, supply and demand gradually improve.
A report by a market research firm showed that total announced purchases during the operator's 2021-2022 procurement cycle were up by approximately 17% compared to the previous collection, reflecting a rebound in demand at the end of the industry's downward cycle. The recovery comes from both modest over-investment in 5G and new digital infrastructure such as the upgrade of gigabit broadband.
In 2022, with Chinese optical module suppliers accounting for more than 50% of the global market share, the scale of development of China's optical communications industry chain will fully surpass that of "foreign countries". There are no longer any significant technological weaknesses in the optical fibre industry, and it is in a dominant position in certain segments of technology. Chinese optical fibre manufacturers have not only thoroughly defeated their overseas rivals locally, but have also switched from defence to attack, competing with their overseas rivals in the global market and even breaking into the European market, an important "bastion" for their overseas rivals.
The "double gigabit" network represented by 5G and gigabit optical network is an indispensable "two wings" and "two wheels" for the construction of a strong manufacturing country and a strong network country, and is an important component of the new infrastructure. It plays an important role in driving effective investment, promoting information consumption and helping the digital transformation of the manufacturing industry. As the most critical link in information and communications, the importance of fibre optic cables is undeniable. With the increasing penetration of 4G and 5G, the demand for fiber optic cables in China's communications industry has also risen, with a surge in demand for fiber optic cables and a promising development outlook for the industry in 2023.
In the future, Hong Kong Optical Cable will continue to be committed to enhancing the international competitiveness of Chinese brands, exporting Chinese brand values and Chinese culture to the world, providing consumers with a new lifestyle and attitude towards life, and exclusively delivering the cultural power of Chinese national brands.
