Corning Inc, the global pioneer in fiber optic industry has completed acquisition of Samsung’s Fiber optic business. The news of this acquisition has been in air for several months. Take over of Korea based Samsung’s Fiber business by US based Corning will have major impact on global fiber optic market.
In the past we have seen major conglomeration of fiber optic companies that have reshaped the industry by changing game strategies and equations in the market. For example, the merger of Prysmian and Draka, at a time when both were leading global optical fiber and cable manufacturers. Acquisition of OFS by Japanese fiber optic product supplier Furukawa was one of the significant one prior to Prysmian-Draka merger.
Acquisitions and mergers are part of strategy to expand and exist in the business. While it gives strength to both partner companies, its staff and products, it gives strong threat to the competitors. Samsung’s fiber optic products have been competitive even in low price markets. Samsung was competitor to Corning in many markets. At the same time Samsung’s products had maintained their quality and reputation. Acquisition of low cost manufacturing base will give clear advantage to Corning in low price markets and emerging new fiber optic markets.
Corning has reached all around the world with its fiber optic products and the fiber optic giant has many manufacturing bases in different countries including China (one of the most competitive manufacturing base for fiber optic products). Chinese fiber optic market claims almost half of the total optical fibers consumed worldwide. China may maintain this lead for another two or three more years. It is expected that China’s consumption of optical fibers will decline in the near future. Decline in consumption of optical fibers is an indication to its declining projects nationwide. Many Chinese domestic manufacturers will look outside China for potential customers for their products. Market trends show such orientation in fiber optic market. It is necessary for leading market players such as Corning to find ways to be competitive in every possible markets.
The press release from Corning also indicates such strategy. Samsung Electronics is a trusted provider of optical fiber, cable, and connectivity for customers in South Korea, China, and Southeast Asia. Corning will integrate Samsung Electronics’ fiber optics business, with manufacturing facilities in Gumi, South Korea, and in Hainan, China, into the Corning Optical Communications business segment. The acquisition augments Corning’s market access and enhances its broad portfolio of optical communications products in Asia.
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