Corning isn’t specifying how long its lead times are for its fiber products, but Mike Bell, senior vice president and general manager of Corning Optical Communications, said this week, “Our normal lead time, what we would prefer our lead time to be, is a month. It’s much longer than that right now.”
Speaking at a Fiber Broadband Association webinar this week, Bell said, “I’ve been in this business for 30 years, and I’ve never seen demand on the scale we’re seeing now. And I’ve never seen us invest in capacity as broadly as we’re doing right now, and frankly as the industry is doing right now.”
Corning breaks its fiber business into two categories: optical fiber and the optical cable’s that house the optical fiber.
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Bell cited the steps Corning is taking to ramp capacity as fast as possible.
In September Corning announced that it is working to support AT&T’s needs by investing $150 million in a new optical cable manufacturing plant in North Carolina, where it will add about 200 jobs.
Earlier this year, Corning also announced plans to build a new optical fiber manufacturing facility in Poland. “That’s driven by growing demand for optical fiber products in Europe and surrounding regions,” said Bell. “As we add more fiber capacity in other places that will free up U.S. capacity for U.S. demand.”
He said optical cable is heavy and expensive to transport. So, it’s best if the cables are manufactured in regional locations. “There are regional standards, and just from a simple logistics perspective it’s really expensive to ship cable around the world,” he said. “It’s an inefficient heavy good.” He compared it to car manufacturing, where most auto makers move close to a market to make their cars. “The vast majority of cable for us is made right here in the U.S.,” said Bell. “Some may be made in Mexico or Canada. We think that’s important. That’s why we’re investing in capacity in the U.S. to support that U.S. demand.”
Another reason Corning is adding more optical cable capacity in the U.S. is because the new infrastructure bill has a buy-American provision, which requires anybody who gets this funding to buy from an American source if there is an American source available.
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But Bell said optical fiber is a little different. “Fiber is more of a global product,” he said. “It’s not as expensive to move around the world. And fiber is a pretty globally-standardized product.”
He said, “We’re the largest optical fiber manufacturer in the world. We supply fiber to make cables ourselves, and we supply fiber to a lot of our competitors that make cable as well."
In terms of fiber competitors he cited Prysmian Group, Chinese companies, and three major Japanese manufacturers, which he didn’t specifically name.
“On the cable side it’s a lot broader than that,” said Bell. “A lot of the fiber makers are also cable makers. And then there are others that don’t make their own fiber that do make cable. CommScope would be one example.”
Lead times
Getting back to the lead times for both optical fiber and optical cable, Bell said there are additional variables at play. For example, if Corning invests heavily in more capacity, but other fiber providers don’t, then more demand comes to Corning, which in turn increases lead times.
“Lead times are much longer than we want them to be, and that’s why we’re adding all this capacity,” he said. “For now, get your orders in early to make sure there’s a place in line. That’s what’s unfortunately happening.”
He is optimistic that lead times are going to improve through 2022 and even further into 2023.
That’s good news because the pandemic, and now the $65 billion infrastructure bill, are driving a land-rush to build fiber across the U.S.
In a research note penned by Wells Fargo analyst Eric Luebchow yesterday, he wrote that based on conversations with companies at Wells Fargo’s investor event this week, “We heard broad-based bullishness that the telcos are in the early stages of a multi-year investment cycle in fiber-to-the-home.” AT&T, Verizon, Lumen, Frontier and others are to lead an industry “that we believe will add +8MM new fiber passings in FY'22 (vs. +5MM in FY'21), and accelerate to nearly +10MM by FY2023.”