Vendors Ramp Up Fiber Production

Even so, demand still seems likely to outstrip supply for the foreseeable future.

June 19, 2000

2 Min Read
Vendors Ramp Up Fiber Production

A slew of announcements are rolling in from fiber suppliers expanding their facilities. Today, Alcatel SA (NYSE: ALA) announced it's tripling capacity in fiber optic plants worldwide over the next two years. And Corning Cable Systems, a subsidiary of Corning Inc. (NYSE: GLW) is adding a 250,000-square-foot second plant in Hickory, N.C., to produce more flame-retardant fiber optic cable.

Later this week, Lucent Technologies Inc. (NYSE: LU), the other leading maker of fiber, is expected to announced the opening of a key European plant in Brondby, Denmark, part of its grand plan to spend more than $1 billion on fiber-making facilities over the next two years.

Alcatel declined to specify how much it will spend on its new facilities. Corning said it plans to shell out "in excess of $40 million" on its project.

The announcements are just the latest in a stream of capacity-expansions made public this year, as demand for fiber optic cable shoots way beyond the 20-percent growth rate most vendors had estimated (see Fiber Queues Put Cablers in Control).

But questions remain about whether supply will actually result in an overall increase in global fiber availability. So far, it doesn't appear that supply will meet demand anytime soon--even with the new plants.

"We doubled our own capacity last year and we are working flat out just to fill current orders," says Betsy Lambert, a spokesperson for CommScope, an assembler of high-speed fiber cables that relies on fiber from the big guys like Alcatel, Corning, and Lucent.

"We're running three shifts 24-by-7, and we're still not meeting demand," says Roger Frizzell, a spokesperson for the Optical Fiber Systems unit at Lucent Technologies Inc. "We're finding that every time we ramp up, demand exceeds what we can supply again. There are markets for fiber, such as the metro market, that didn't even exist a short time ago."

If there's just the teeniest bit of glee in his voice, it's not surprising. There's no doubt that making fiber's getting to be bigger-than-ever business opportunity for the leading providers. In fact, Lucent is restructuring its entire business based partly on demand for fiber. In a move to streamline its focus on telecom, Lucent plans to spin off its enterprise networking businesses, valued at more than $8 billion, into separate entities. This will leave the recently renamed Optical Fiber Systems unit free to focus full time on optical cable.

But skeptics say they're concerned that suppliers have an interest in keeping fiber scarce and prices high.

What's more, some question the motives behind all the expansion. "Sometimes expansion announcements can be looked on as strategic strikes against the competition," says Mark Lutkowitz, president of Trans-Formation Inc., a consultancy. "It's a way of telling them 'Think twice before you start building.'"

-- by Mary Jander, senior editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like