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Last Updated: September 13, 2022

Richard MackAs the leading supplier of materials for making interconnection products, which are key building blocks in communication networks and many other industries, Fiber Optic Center offers the following comments on the effects of the Covid-19 pandemic and the current market situation.

The spread of this disease has raised two issues for manufacturers.  The first one is near-term: how much will travel restrictions and government-mandated – and temporary – business shutdowns affect assembly manufacturers.  The second one is longer-term: how much an economic downturn or recession will affect demand for optical cable assemblies.  In the latter case, US unemployment is spiking up, consumer spending is plummeting, and economists are openly discussing the likelihood or the potential duration of a recession.

Unfortunately, the situation is changing daily.  To be blunt, the news is getting worse each day, except for a few countries where there are signs of improvement after weeks of businesses being closed and workers’ movements being restricted.  At this point, no one can say how long government-mandated shutdowns will last, or how much they will affect longer-term economic growth.

From our perspective at FOC, we can comment on several things: what we are seeing now (in the latter weeks of March, 2020), developments in the industries that our customers serve, and factors that could affect demand for interconnect components in the future.


Photo by Joshua Sortino on Unsplash

Regarding near-term shutdowns

We have spoken with some FOC customers and looked at the websites of many cable, connector, and assembly manufacturers.  Many of them have a press release, a letter from the CEO, a blog entry, or a home-page statement saying that they are open for business during the Covid-19 crisis.  These statements explain that the manufacturers are supporting “essential” industries, are adhering to new safety guidelines, and are continuing to work with their customers to avoid disruptions.

What are essential industries?  The definition varies among US states, but it typically includes food and agriculture, pharmaceuticals, health care, utilities, warehousing and logistics, shipping and transportation, oil and gas, emergency services, and financial and legal services.   Several of these industries use optical cable assemblies, especially utilities, which include telecom networks.

Some states have very detailed lists with more than a hundred types of companies or organizations considered essential.  Some states have restrictions on manufacturing operations, depending on the type of product.  Other states do not.  Some businesses that enable essential industries to remain in operation are also considered essential.  Examples include supply houses, distributors, maintenance service companies, etc.

In all cases telecom networks and data centers are considered essential, with some states including broader designations such as “digital infrastructure,” or “information technology.”    The “telecom” designation includes all types of fixed and wireless network operators that transport voice phone calls, entertainment video, Internet services, and cloud services.

Ongoing demand in telecom networks and data centers

Actually, telecom and cloud services are not just “essential” during the pandemic.  They are vital.  For example, telecom networks are proving instrumental for collecting, managing, and disseminating medical information.  Telecom and cloud services also are critical for the logistics of shipping and materials handling and many other phenomena that are being increased due to anti-virus procedures.

Plus, telecom networks are seeing increased loads due to other pandemic-related phenomena.  Corporate work-from-home policies are driving up traffic.  The shift from classroom to Internet schooling also drives up traffic.  And people staying home are using more Internet applications – social networking, video-conference services, on-line gaming, and entertainment videos.

With all this going on, carriers say network utilization is up.  Bandwidth requirements are up.  This means activating more fibers and wavelength channels, which in turn contributes to the ongoing demand for cable assemblies and other products incorporating fiber terminations.

For example, video-conferencing providers, such as Cisco (Webex), Microsoft (Teams), Zoom, and many others, have seen a sharp uptake in new downloads and usage.  These companies operate with in-house data centers plus complex series of contracts with external service providers, data center operators, and telecom carriers.  And these companies all are adding capacity in response to the increased demand.

Regarding longer-term business slowdowns …

Looking back 20 to 30 years, the demand for optical cable and components has increased with healthy annual growth rates – often greater than 10%.  Fiber optics markets usually have grown more rapidly than other industries, even during economic downturns.  Except for the market collapse associated with the dot-com and telecom bubble phenomena of 2000 to 2002, fiber optic technology fared far better than other industries in recent recessions, including the global recession of 2008 to 2009.

There are several reasons.  First, fiber optic technology has been a key part of the strong growth in several new industries — Internet backbones, cellular-mobile infrastructure, digital transmission of video entertainment, laser-based surgical procedures, fracking and other new oilfield processes, etc.  Second, many telecom network construction projects are funded over several years and may be scaled back but not entirely postponed or canceled during a recession.  Finally, the key characteristics of fiber optics often mean that it is a cost-effective or cost-reducing technology for communication networks and other applications.  These characteristics include the bandwidth-and-distance performance, small size and weight, efficiency and flexibility for accommodating network growth, reliability, and others.

Looking at the current situation, carriers throughout the world are just getting started on 5G network construction, the latest generation of cellular technology.  Fiber-to-the-home (FTTH) projects are underway in hundreds of carrier networks.  In the US, for example, fewer than 50% of homes are passed by FTTH systems.  So there is a lot more construction needed to provide high-bandwidth, fiber-based broadband services in many markets.  Cloud services and other Internet-traffic drivers will necessitate on-going construction of data centers, with fiber installed between racks inside the data centers and also in the cable systems tying them to the Internet and end-users.

All of this does not mean that optical components are entirely immune to a recession.  But it does mean that optical components will benefit from key drivers not present in other industries.  Overall, the greatest driver for optical assemblies is the use of data services, which continues to show steady increases with more users (including “things” in the Internet of things), and more data-intensive applications.

So yes, a slowdown in construction may have some effect, and slowdowns in building, ship, and aircraft construction will affect assembly demand.  On the other hand, the ramp up of work on 5G networks and other telecom projects around the world will offset some of the slowdowns in other industries.

In closing, we note that the fiber optic cable assembly market is quite diverse.  Looking at just North America, this market has thousands of assembly customers, hundreds of manufacturers, and dozens of distributors.  This market also has many complex supply-chain pathways, with assemblies passing from the manufacturers to the end-users through prime contractors, system integrators, installation contractors, subsystem and equipment manufacturers, and other groups.  Because of these complexities, a slowdown in specific industries may not be felt by all manufacturers, or not with the same severity nor with the same timing.

Fiber Optic Center, Inc. is monitoring the global coronavirus outbreak situation, taking proactive measures to ensure the health and safety of all of our employees, customers, vendors, and their families and following all official government guidance and travel advisories.

To provide effective communication to all, we have created FOC STATEMENT ON CORONAVIRUS (COVID-19) issued by Ben Waite, President and CEO that is updated on a regular basis.

Please bookmark this page for your reference and we welcome an open dialog on this topic as we try to keep you apprised of major developments with subsequent articles.

If you have questions about this article or would like to share your views as the pandemic progresses, please do contact FOC at for immediate dialog and responses on this topic.

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