Carriers in the telecommunications industry have cited long lead times and other supply chain challenges as major obstacles to their network expansion plans. Corning, one of the largest suppliers of fiber optic cable and fiber, believes adding capacity at a new plant this year will free up space to meet growing U.S. demand and help reduce lead times to more reasonable levels. Grades.
The vice president and general manager of Corning's fiber optic and cable business explained that there are two main issues causing supply chain disruptions: raw material shortages and manufacturing capacity constraints. While raw material shortages have caused "some of the worst disruptions in the industry's supply chain," Corning has responded by securing secondary or alternative sources of the necessary materials.
In North America, however, capacity is the real issue. The problem in the U.S. is particularly focused on the fiber optic cables that house the fiber, rather than the fiber itself.
A year ago, Corning announced plans to build a new fiber manufacturing facility in Poland and in September 2021 said it would spend $150 million to expand its existing fiber optic cable manufacturing operations in North Carolina, USA. The Poland facility will be operational this year, and once it is, it will "free up U.S. fiber capacity to meet U.S. demand.
Corning's senior vice president and general manager of optical communications said lead times are expected to drop "dramatically" as 2022 progresses. By 2023, the wait time for most customers "will be less than a year.
Companies planning to use Corning for their fiber supply include AT&T, which aims to expand its fiber coverage from 15 million to 30 million locations by the end of 2025, and Brightspeed, which plans to deploy fiber to 3 million locations in the next few years.
The Dell'Oro Group vice president said that while the analyst firm doesn't have any official data to share, he has heard that some smaller providers are currently facing 12- to 16-month lead times. During Corning's fourth-quarter earnings call, one analyst mentioned that carriers are facing waits of up to 24 months. Delays have become such a concern that some carriers are asking for waivers from the "Buy American" requirement as part of the recently passed Infrastructure Investment and Jobs Act, which allocates $65 billion for broadband. He added that the delay could also affect carriers that receive funding from the Federal Communications Commission's (FCC) Rural Digital Opportunity Fund (RDOF) and other government programs that link construction milestones to promised support. For example, RDOF participants must complete 40 percent of their deployment goals by the end of the third calendar year after the FCC approves funding. To date, the FCC has indicated its readiness to authorize more than $5 billion of the $9.2 billion awarded through the RDOF Phase I auction in 2020. Rationalizing fiber supply is key because it is really at the base level of the entire supply chain.
"If you can't go build it, it affects everything from the electronics to the separator to everything on top. It also has a domino or snowball effect on all the devices," he explained. "I see this particularly in the order backlog at OLT and ONT, who also have supply chain issues because they can't get some of the components they need in terms of processors and semiconductors, but they have the equipment to meet the fact that because the carriers, their customers, can't get fiber into the ground, they ship out product that remains in the warehouse. "
