Europe needs a more robust optical fibre supply chain, says Corning chief

The head of the world’s biggest producer of fibre optic cable said the EU needs a “much more resilient and self-sufficient” supply chain to tackle a tight market as the rollout of 5G and rapid growth in data centres drives soaring demand for the crucial material.

“You don’t really have a robust supply chain here in Europe,” said Wendell Weeks, chief executive of Corning, in an interview with the Financial Times.

“The global supply chain is not what we thought it was and manufacturers like us need to take on the responsibility of producing closer to our customers.”

On Thursday, the US-based company opened one of the biggest fibre plants in the world in Poland, which aims to meet 30 per cent of demand in Europe over the coming year.

Optical fibre is made of glass as thin as a human hair. Once produced, the fibre is often sent to cable manufacturers who wrap it in a plastic coating and protective tubing for use in telecoms networks.

European cable manufacturers currently import more than half of their fibre from Asia and North America.

Demand for the material has surged over the past three years driven by the rollout of 5G infrastructure, which requires around 100 times more fibre than existing networks. Meanwhile, tech companies such as Amazon, Google and Microsoft have pumped billions into expanding their data centre estates, including laying huge international fibre networks under the ocean.

Europe and North America still lag behind Asia in terms of the scale of fibre rollout. Only a third of households in Europe currently have a fibre connection, compared with more than 90 per cent in China.

“It’s not so much that the price is a significant issue for our customers. The issue primarily is supply,” Weeks said.

However, an executive at Prysmian Group, currently Europe’s largest fibre producer, contested the view that there was a significant shortage in the continent, arguing there was only a temporary tightness in the market caused in large part by higher input costs.

“The fibre supply chain is tight but I don’t see any shortage,” said Philippe Vanhille, executive vice-president of telecoms at the Italian group.

Vanhille added that Europe was viewed as a “paradise for business”, with the UK, Germany and Italy currently seen as particularly attractive markets to sell to because they had lagged behind European peers in updating their network infrastructure and were now massively accelerating their fibre rollout.

The price of fibre has decreased precipitously over the past decade. However, it has increased again in Europe this year, driven in part by shortages of some crucial components, including helium, octamethyl and silicon metals.

According to industry data provider Cru Group, prices in Europe have risen to €6.5 per fibre/km from record lows of €3 in January 2021. “Prices in Europe continue to be supported by tight availability and elevated production costs,” they wrote in a note.

Fibre accounts for between 5 and 20 per cent of the cost of building a terrestrial network.