SUPPLY CHAINS
CHAIN REACTION
What are the biggest supply chain issues that could impact telecoms in 2023, and how can we, as an industry, alleviate these problems?
KEELY PORTWAY D
uring the past two years, the global semiconductor shortage has been big news, even making mainstream headlines
across the world. But, contrary to popular belief, the Covid crisis was not the cause or starting point for this problem. Te move towards the rise of 5G and beyond
was a driver for increased demand for chips, coupled with trade disputes between the west and China resulting in the US banning the sale of semiconductors and other technology to Huawei. Tis meant that chip makers outside the US became overrun with orders from the company, and since the pandemic, the issues became exacerbated. For the telecoms sector this had the impact, in
many markets, of slowing FTTH deployment for operators. Similarly, broadband providers were experiencing delays of more than a year when ordering internet routers, while some carriers were quoted order times as long as 60 weeks, more than doubling previous waits. A study at the heart of the shortage from
market research firm, Gartner, pointed to the worldwide semiconductor shortage continuing
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until late 2022, when a recovery to normal levels was expected. Indeed, there have been a number of initiatives in a number of markets to try and alleviate the problem and, following a period of adjustment, analysts predict that things will begin to return to normal in 2023 (find out more on page 28). Another shortage affecting telecoms that
hasn’t received quite so much fanfare is the fibre optic cable itself. In the summer of 2022, market intelligence firm CRU revealed that, according to its latest data, a global fibre optic cable shortage increased prices and lengthened lead times, in particular in China, Europe and India. Te company said that average prices for fibre rose by up to 70% from $3.70 per fibre kilometre in March 2021, to $6.30 in July 2022, although the 2021 figure was recognised to be a ‘record low’.
Component crisis Some of the contributory factors for the shortage, according to CRU, are related to the components used to produce the fibre cables, with a shortage of helium cited due to service interruptions to plants in the US and Russia. Tis,
in turn, has led to significant price increases since 2019. Meanwhile, prices of silicon tetrachloride – another key component in fibre production – have increased by up to 50%, according to CRU. Energy too was a factor, particularly in Europe, where prices jumped more than five times from what they were at the start of the year. For operators, it meant longer lead times for cable deliveries, and while some of the larger firms were able to buy in bulk to try and get around the issue, that wasn’t the case for all companies. In October of 2022, CRU released an update
on trends surrounding the price of fibre optic cables, in which it noted that G652.D bare fibre spot prices started to turn a corner in September. Domestic spot prices in China stagnated, said CRU, and in India, they scaled back INR5 /F-km. CRU revealed that, given exchange rate
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Rising energy prices and persistent tightness in 2022 Q4 could support European prices at elevated levels for longer, although soſtening demand will act as a drag”
Fibre Yearbook 2023
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