The Fiber-Optics Market Under Further Pressure: 10 New Questions for Maarten Verbunt

Earlier this year, we spoke with him about the impact of scarcity and geopolitical tensions. Now we’re looking back and ahead at the developments that have unfolded since then.

Question 1: In our previous interview, we discussed the explosive growth in demand for fiber optics. How has that market developed since then?

In fact, the expectations we expressed back then have come true in full. And perhaps even more so than expected. While there was still a great deal of uncertainty at the beginning of this year about how long this situation would last, we are now seeing that demand remains structurally high. The biggest drivers are still the combination of defense applications and AI. Due to the wars in Ukraine and the Middle East, enormous amounts of fiber optics are being used to control drones. At the same time, companies such as AWS (Amazon), Meta, Microsoft, and Google, among others, are still investing billions in hyperscale AI data centers. Both markets are effectively competing for the same “raw material”: fiber optics. As a result, pressure on the market has only increased further.

Question 2: Is it true that A2 fibers, in particular, are under pressure?

Both G.657.A2 fibers and the standard G.652.D and G.657.A1 fibers are currently in short supply. However, we are seeing that the greatest shortage is currently with G.657.A2 fibers. This is because these highly bendable fibers are widely used in military drones as well as in high-quality, thin patch cables and breakout cables for hyperscale data centers. Premium prices are now being paid for these fibers, which is putting further pressure on availability. At the same time, we are noticing that standard singlemode and multimode fibers are also becoming increasingly difficult to obtain, as global demand for fiber optics remains consistently high.

Question 3: You mentioned earlier that prices have been rising across the board. What is the current state of that market?

Prices are rising faster than I had expected a few months ago. Whereas we previously discussed fiber prices ranging from $10 to $15 per fiber kilometer, we are now seeing that some manufacturers—particularly Chinese ones—are already charging prices above $20 per fiber kilometer. Fortunately, there are still manufacturers offering lower prices, but the trend is clear. And to be honest, I don’t expect this to stop anytime soon.

Question 4: What is causing these price increases?

This is the result of a combination of factors. Raw materials such as silicon and germanium remain expensive, while energy prices are also high. In addition, helium is becoming increasingly difficult to obtain. This gas plays a key role in the controlled cooling of optical fibers in the drawing tower during the production process, which means that the scarcity of helium is also driving up production costs. The main cause, however, is that available production capacity is simply limited. Manufacturers are therefore making increasingly deliberate choices about the applications for which they use their optical fibers. In this regard, we see that defense applications and AI data centers are currently often given priority over the traditional telecommunications market.

Question 5: Has anything surprised you in recent months?

Absolutely. What has perhaps surprised me the most is that manufacturers who do not produce preforms (the glass cylinders that serve as the basis for fiber-optic production) or fiber-optic cables themselves are now also being forced to raise their prices. These companies traditionally purchase their fibers from the major fiber-optic manufacturers. Many of them had already contracted and secured their volumes for this year, but as we head into the second half of the year, they, too, are facing higher purchase prices. As a result, you’re now seeing patch cables, breakout cables, and complete fiber-optic systems becoming more expensive as well. To be honest, I hadn’t expected that at the beginning of this year.

Question 6: What do you see as the biggest impact in practice right now?

For products with one or two fibers, the impact remains relatively limited. But as soon as you look at cables with a high number of fibers—such as cables with 48, 96, 144, or even 288 fibers—you’ll see the price increase almost immediately. That’s precisely where the cost per meter of fiber skyrockets. Prices that are two or even three times higher are no longer an exception.

Question 7: How are the other commodities performing?

Prices for raw materials such as PE, which is widely used for cable jackets and plastic pipes, remain high but appear to have stabilized somewhat in recent times. Nevertheless, this market remains heavily dependent on the price of oil, which in turn remains directly linked to the geopolitical situation in the Middle East. For this reason, I expect this market to remain volatile for the time being.

Question 8: You mentioned earlier that delivery times might be longer. Has that become a reality?

Absolutely. We’re seeing delivery times that have doubled in some cases. This isn’t just due to production capacity, but also to logistics. Shipping from Asia is becoming more complex, and containers are increasingly having to take alternative routes. In addition, geopolitical tensions are causing delays and higher shipping costs. Availability may now be an even bigger challenge than price trends themselves.

Question 9: What advice would you give to organizations that will be implementing fiber-optic projects in the coming period?

Don’t wait. Now, more than ever, it’s important to plan well ahead. Don’t just focus on projects currently underway, but also on those that won’t start for another six or twelve months. Start discussions with suppliers and/or manufacturers early on, make arrangements regarding capacity and long-term planning, and consider strategic inventory levels. Organizations that think ahead today and secure capacity will simply have much greater delivery reliability tomorrow.

Question 10: Finally, what is your outlook? When do you expect the market to return to normal?

Of course, that remains very difficult to predict. But when I look at everything I’m currently hearing from the world’s largest fiber-optic manufacturers, I honestly don’t expect the market to normalize anytime soon. Manufacturers are investing heavily in additional production capacity. I have no doubt about that. However, expanding preform and fiber production takes months, if not years. At the same time, demand from AI data centers and defense applications remains consistently high for the foreseeable future. My personal expectation is therefore that we’ll be dealing with a tight market at least until mid-2027. And that’s precisely why it’s important for organizations to start thinking ahead now and strategically organize their supply chains.