Domestic sales buoy optical fiber industry

Demand from China’s flourishing telecommunications market has enabled some fiber-optic cable makers in the country to stay afloat despite declining exports. Jiangsu Hengtong Photoelectric Stock Co. Ltd, for instance, generated $108 million from domestic business in 1H09, a 39 percent increase from the previous year. In contrast, it managed to register only more than $1 million in overseas sales.

Further, revenue reached $192 million in 3Q09, driven by the strong 3G line and the emerging fiber to the home segment.

Confident that this trend will continue throughout 2010, Jiangsu Hentong plans to expand production to 20 percent or about 9 million core kilometers of fiber-optic cables annually. Companies ramp up manufacture

China’s entire optical fiber industry rolls out approximately 63 million kilometers of fiber-optic cable assemblies a year, according to the China Association of Communication Enterprises. CACE forecasts that by late 2010, the country’s total annual output will exceed 80 million kilometers. This will rise by an additional 20 million kilometers by 2011, resulting in a possible oversupply by year-end.

The rapid increase in production is attributed to improvements in processes in recent years, particularly in preforms fabrication. With industry players such as Yangtze Optical Fiber and Cable, Futong and Fasten now capable of turning out quality preforms locally, manufacturing costs have dramatically decreased. This has allowed companies to ramp up turnout at minimal outlay.

China suppliers made about 500 tons of the component in 2009. To meet growing domestic demand, they plan to release up to 1,500 tons in 2011.

Various raw materials and equipment, however, still need to be purchased overseas, mitigating the impact of the rapid capacity expansion by most manufacturers.