Fiber optics technology uses flexible, transparent glass (silica) or plastic strings to transmit information. Each strand is equipped to carry light between the two ends of the fiber. Because they can communicate messages over longer distances and higher bandwidths than electrical and metal cables, they offer significant advantages and have been widely adopted in the last years. Fiber optics also offer more security for communicating large data sets — if someone attempts to tap a fiber optic cable, there’s a high chance the glass will break.
Fiber optic components include cables, splitters, transceivers, active optical cables, amplifiers, circulators, and connectors — used in communications, analytical and medical equipment, lighting, and distributed sensing.
The fiber optic components market has seen a high rise due to technological advancements in cloud computing and higher-speed broadband networks for telecommunications and big data applications. These high bandwidth-intensive requirements include the IoT, robotics, analytics, and artificial intelligence (AI) and virtual reality (VR) applications.
The Market Across Regions
The fiber optic components market in 2019 was dominated by Asia-Pacific (APAC). This region has seen growth fueled mainly by development in communication applications, the expectation of 5G technologies, and the SJC2 project.
In 2018, a contract was signed between the consortium of APAC network operators and Japanese-based NEC Corporation to design SJC2, a 9,300 mile-long submarine cable to connect the countries of Japan, Singapore, Thailand, Cambodia, Vietnam, China, Taiwan, Korea, and Hong Kong. The cable will have a capacity of 144 Terabits per second, the equivalent of simultaneously streaming 5.76 million UHD videos. Among the companies that participate in this endeavor are Chan Wei, Chunghwa Telecom, Singtel, China Mobile International, KDDI, VNPT, Broadband, and Facebook.
The second most important market region in 2019 was North America. Across the US, Canada, and Mexico, technological advances have led to higher competitive markets. Several companies are hosted in the region, focused mostly on the development of advanced technological components. With governments investing in telecommunications infrastructure to create employment and spur economic growth, the region is expected to witness a steady CAGR from 2020 to 2027.
Brazil also holds a significant market share due to an increased investment in fiber optic components and growth driven by masses of consumers, although COVID-19 will most likely continue to affect financial transactions in 2020 and 2021.
5G technology installations rely on low latency and edge computer solutions and are expected to offer new market opportunities for high-speed connectivity products such as fiber optic cables.
5G can provide peak data rates of 10 Gbit/s, which is enough to support augmented reality (AR) and VR as well as high-density video and audio. Other benefits include ultra-reliable low-latency communications (required to track and control autonomous vehicles), and massive machine type communications (mMTC), which helps transport data for connected security cameras, medical devices, and other IoT technologies.
Although 5G is dominated by the world of wireless and mobile, its data-transport backbone consists of submarine and terrestrial cables, data centers, and transmission lines. 5G is anticipated to push fiber optics to homes in Europe and North America, where only 15% have the technology — compared to 80% in South Korea and 90% in Singapore. In APAC, governments are making major investments in deploying networks for their large consumer markets.
The Impact of COVID-19
The COVID-19 pandemic is affecting industries across the world, with reports from the World Health Organization (WHO) listing the US, France, Spain, Italy, Germany, the UK, Russia, Turkey, Brazil, Iran, and China as the most impacted.
The global economy is expected to take the worst hit in 2020 and 2021, due to the COVID-19 crisis disrupting international trade and restricting supply chains. Production shutdowns and labor scarcity are factors that will affect the construction sector in particular.
Because of this, technologies and solutions such as fiber optic components are expected to suffer from reduced spending and adoption.
However, varying opportunities are appearing in this landscape. In particular, the medical fiber optics market could create good trends in distinct regions such as the US, APAC, and Europe. China and Latin-America also display positive forecasts.
Companies are adopting inorganic market strategies across the world to meet the growing demand. The focus is placed on acquisitions and expansion of business in order to maintain brand names globally.
For example, this year, Fujitsu is introducing compact and low-power consumption 400 Gbps compliant transceivers that can interconnect cloud data centers up to 74 miles away. AMP Capital has also just acquired a majority stake in FTTP builder VX Fiber, supporting it with investments in existing projects in Sweden, South Africa, and the UK, and targeting an advanced pipeline of opportunities in Belgium, Austria, and Germany.
The global fiber optic components market is anticipated to rise between 2020 and 2026, growing at its highest CAGR for the forecast period.
The deployment of data centers has caused an increase in the adoption of various optical fiber components that require periodic retrofitting. Incremental improvements in edge computing and IoT are also paving the way for the market.
However, it’s the upcoming 5G network installations that offer unique opportunities for fiber optic cables and other high-speed connectivity products such as micro base stations and edge nodes. It’s estimated that 5G will contribute $900 billion to the APAC region during the next 15 years — thus, fiber optic components development is expected to continue rising.