Shin-Etsu Announces Expansion of Preform Production

Shin-Etsu Announces Expansion of Preform Production

Japanese preform manufacturer, Shin-Etsu Chemical has revealed it’s plan to dramatically increase production of optical preforms, which is the key raw material for optical fiber in the coming years. The global fiber optic market has been undergoing through a massive shortage of optical fibers that makes delays in many projects. The shortage has also driven the global optical fiber prices high. Shin-Etsu’s move will help the fiber optic industry to speed up with the demands from different sectors of the industry.

Strong demand from telecom sector is anticipated for high-speed transmission cable (Optical Fiber Cables) as cellular carriers prepare to launch fifth-generation service. Shin-Etsu is preparing to satisfy the needs emerging from the market. The move by the manufacturer will to some extent ease the tight situation created by the big difference between demand and supply. The Tokyo-based chemical company is seen investing 18 billion yen ($160 million) to expand output of synthetic quartz, a critical ingredient of the fine glass filaments at the heart of high-speed data transmission systems.

Optical fiber preform is the raw material for optical fibers. Preform is a cylindrical glass rod precisely engineered to create a core and a surrounding cladding layer that can be differentiated by their differences in refractive indices. A quartz cylinder 2 meters long and 20cm in diameter can be used to make roughly 3,900km of optical fiber. The synthetic type that Shin-Etsu produces is purer than natural quartz, allowing optical signals to pass through relatively undisturbed.

Shin-Etsu will double synthetic quartz output capacity at a joint venture with two fiber-optic cable producers, and a joint venture with top Chinese optical fiber maker Yangtze Optical Fibre and Cable. How much the ventures produce has not been made public. The expansion will involve new equipment for molding silicon compounds used in quartz production into cylindrical shapes, among other additions expected to be up and running by 2019.

Shin-Etsu will also add a building in 2018 to a factory in Ibaraki Prefecture north of Tokyo, enabling the company to respond flexibly as optical fiber demand rises.

The optical fiber market, now worth roughly 500 billion yen, is seen growing 5-7% annually through 2020 as cellular providers lay down infrastructure for 5G network service set to debut in advanced economies around then. Shin-Etsu and other Japanese producers are ramping up output to capture the mounting demand for precision fiber-optic cable and high-quality quartz that expansion entails.

Furukawa Electric, the world’s No. 3 maker of optical fiber, plans to roughly double production capacity for the material from fiscal 2016 to fiscal 2019 at a cost of around 16.5 billion yen. Electrical equipment manufacturer Fujikura will begin mass production this fiscal year of new optical fiber products in the U.S. that will make transmission cables lighter, while cable producer Sumitomo Electric Industries is considering raising output in China.

The news of Shin-Etsu’s move to expand its preform manufacturing capacity is a relief to the fiber optic network investors. It is estimated that a gap of more than 70 million kilometers of optical fiber will be there from 2018 between supply and demand. The global demand for optical fiber is expected to touch around 480 million fiber kilometers in coming years and will continuously increase, largely depending on the demand from China. Chinese demands are almost more than half of the total demand from Non-Chinese market.

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