1. Home
  2. /
  3. Blog List
  4. /
  5. Uncategorized
  6. /
  7. Inflationary pressures in the world of fibre and how companies are handling it

Inflationary pressures in the world of fibre and how companies are handling it

Posted By :


Global manufacturers and inflation have a complicated relationship. Price increases for raw materials, labour shortages, and logistical problems are where it all begins. The combined impact of these issues could reduce manufacturing margins. This will ultimately pave the way for escalated product prices and service fees because of increasing pass-through expenses for global manufacturers, particularly global optical enterprises. However, it’s not as easy as it seems. Let’s have a look at how major optical companies manage inflationary pressures and come up with innovative strategies to lessen the impact of price increases.

Inflation is evading the entire supply chain and shrinking margins

The Consumer Price Index (CPI) climbed by an annualized 7.5% in January 2022, making it the highest in four decades. Meanwhile, many input costs for global manufacturers have been rising by a very wide margin. For instance, crude and aluminium prices hit an all-time high in the past three years. These data points clearly highlight that input cost pressures are not expected to ease soon. As this trend prevails among all the manufacturing industries, the optical fibre cable industry is no different. 

Helium supply, which is used as an inert gas for cooling during fibre drawing, has become a sore point for producers around the world. CRU suggests helium gas prices have surged by at least 50% in recent quarters due to production problems at the major US and Russian suppliers.

Raw material price hikes, and tight supply for helium gas, SiCl4, and HDPE, have once again pushed up fibre and cable prices. G652.D bare fibre spot prices increased, notably in Europe and India.

Along with raw material price hikes, supply chain disruptions are likewise expected to persist. According to the PWC pulse Survey 2022, supply chain challenges (in both availability of supplies and clogged logistics) are perceived to become a strong determinant of future growth. Most (58%) agree that improving supply chain resilience and re-evaluating inflation-related pricing strategies (55%) are very important to their ability to grow in 2022.

Globally, more than three leading optical fibre companies such as Corning, Fujikura, and Prysmian have clearly highlighted that inflationary pressures have significantly impacted their margins in the last two to three quarters.

With global cable manufacturers hitting on multiple fronts, they are now looking forward to a new pricing strategy to preserve margins. A pricing strategy that aligns well with the cost of goods and inventory management could possibly support them. Most industry leaders realize that they will need to find ways to inject agility and resilience into their organizations.

Global optical companies are increasing prices to offset inflationary pressures

Global financial analysts have broadly cheered vendors’ ability to get more money for their existing products, but incorporating or raising prices for existing contracts has been difficult. It is expected that these players will incorporate a new pricing strategy for the latest deals and products. 

Some of the players who are making the first move in raising product prices, are Commscope, Nokia, and Corning:-


“We are making good progress in our efforts to raise prices in order to offset the profitability impacts of inflation,” CommScope CFO Kyle Lorentzen said in its Q3 FY 22 conference call.

Global financial analyst Raymond James said in its recent note to investors, “We consider this significant because CommScope has historically had a hard time increasing prices, particularly in its operator/service provider customer verticals.”


The big Nordic vendor of 5G equipment appears to be conducting similar price hikes. Nokia officials at the recent MWC trade show in Barcelona, Spain. “Its prior 2022 operating margin forecast of 11%-13.5% incorporates this pricing strategy, along with its assessment of input cost changes.”


Corning recently quoted that the company’s recent price increases were a driving factor behind the 7% rise in the company’s fibre division income  (FY 2021-2022). “Certainly better price realization helps on the revenue line,” said Corning CEO Wendell.

It is quite clear that there is definite upward pressure on prices, but unlike commodity and consumer goods prices, which have a very close correlation to inflation, infrastructure pricing is much more nuanced. Long-term supply contracts over multiple years make it difficult for global optical vendors to suddenly increase prices. Possibly, the industry-wide transition to software and virtualization could help lower pricing.

Focus on implementing new strategies

Though there is one right strategy in this industry to preserve margins during this stormy business environment, we can explore quite a few which can create long-term impact:

Mitigating supply chain risk 

It is imperative to sidestep the supply chain difficulties and mitigate supply-chain risks. Prysmian has undertaken an approach to make the supply chain more resilient. Prysmian continuously assesses potential risks such as single sourcing, offer/demand unbalance, and financial risk. These risks are managed by long-term supply agreements when the supplier is unique or substitutable only with great difficulty and for a long time. In the event of financial risk or tight market offers, Prysmian cooperates with technical functions to identify alternative suppliers to ensure diversification of sourcing options.

Similarly, to create a diversified pool of suppliers, Corning has created a consortium called ‘Group Purchasing Organizations” (GPOs) in different markets to understand what they are doing and how they can benefit by connecting with different suppliers. This consortium approach not only offers cost benefits but opens up new market opportunities: – understanding best practices, market intelligence, and new product categories.

You can do value engineering, optimize and manufacture products more effectively, but what we’ve found is the next threshold is really to work with other like-minded organizations and highlight the importance of supply chain collaboration and to leverage procurement consortiums where applicable.-Tom Kruse, Global Head, Supply Chain Collaboration, Corning

Launching new business transformation programs

Restructuring the business and realigning the cost objectives is one of the few ways to manage inflation. Recently, Commscope presented its business transformation plan at an investor-meet Dec 2022. Through a business transformation plan, Commscope aims to increase its EBIDTA and easily manage the growing inflationary pressures. Some of the planned actionable steps are:- to divest non-core assets, optimize capital allocation, and target product introductions.

Paying strong attention to global developments and changing policies 

In these changing times, optical companies need to pay attention to global developments, the realignment of countries’ alliances, and the changing policies of international suppliers. These factors can no longer be taken for granted. One of the industry players that has been able to foresee such global developments is Corning. Corning has smartly managed the chipset crisis by improvising its global supply chain and by creating a pool of diverse suppliers. In addition to this, Corning is one of the first industry players to mitigate inflation through increased prices. They took a significant number of price actions in the back half of 2021.


Well, it is undeniably true that supply chain problems and inflationary pressures exist and will continue to do so. It’s critical to gain a thorough understanding of these issues and formulate a strategy to deal with these rapidly evolving challenges.

Leave a Reply

Your email address will not be published.

Our Latest Blogs

Managed Service

Driving Value with Managed Services

Technology is evolving at a consistent and rapid pace. Technology specialists are incorporating cutting-edge practices to boost the efficiency of...
Read More
Digital Network

Bridging the Digital Divide in the UK

The Digital Divide in the UK The "digital divide" is a growing concern in the UK, where access to technology...
Read More
Optical Fiber

Debunking the Common Myths about Optical Fibre

As data-intensive applications like video streaming, online gaming, and cloud computing become more common, the need for increased bandwidth has...
Read More
Fiber Optic Testing Tools

How Robotic Tools are Revolutionizing the Detection of Optical Fiber Failures

The fiber optic communication industry has revolutionized the entire Telecommunication industry by providing higher performance, more reliable telecommunication links with...
Read More
Fiber Optic Technology

Recent Advances in Optical Networking Technology: A Look at the Future of Data Transmission

Since several decades ago, optical networking technology has been developing quickly. Fiber optics is becoming a key component of the...
Read More
Optical Interconnect Technology

Optical Interconnect Vs. Electrical Interconnect: All You Need to Know

Interconnectedness is increasingly becoming the backbone of a modern, progressive world. It is what is driving the escalation of digital...
Read More
Network Running

Keep The Network Running in The Remotest Locations: Here’s How STL Can Help

The pandemic has unravelled the importance of reliable connectivity. From smart classes to online groceries, the internet is everywhere. Yet,...
Read More
Managed Service

5 Benefits of Using a Managed Security Services Provider

Investing in cybersecurity is the need of the hour as the cyber threat landscape evolves. But as cyber threats continue...
Read More
Optical Interconnect Technology

An Overview of Optical Interconnects: How They Work and Their Advantages

Optical interconnects are a crucial component of modern electronic systems. They are used to transmit data and power between different...
Read More
Network System Integration

Network System Integration: A Guide to Choosing the Right Optical Fiber Manufacturing Company

One of the crucial factors of a network system integration project is choosing an appropriate fiber cable; they determine the...
Read More
Optical Fiber

10 Ways Optical Fibre Has Changed the World

Optical fiber has revolutionized the way we communicate and access information. From high-speed internet to advanced medical procedures, the benefits...
Read More
Data Center Design

Designing Data Centre Networks: Strategies for Maximum Efficiency and Performance

Data centre design and the data network that supports it are critical components of any organization's IT infrastructure. The way...
Read More
Network Modernization

Accelerating Your Network Modernization Process

Network modernization is crucial for businesses to stay competitive in today's digital economy. However, the process can be time-consuming and...
Read More
Network services

Understanding Network Services and How They Enhance Your Business

A robust network is a must for any type of company in the twenty-first century because most products are digital...
Read More
Data centre

The Rise of Data Centers in India

With data consumption on the rise, cloud adoption accelerating, and technology demand soaring higher than ever before - Indian corporations...
Read More
RAN Services

Building a Faster, More Connected Healthcare Network with Radio Networks

In recent years, the category of linked medical devices has expanded to encompass Internet of Things (IoT) gadgets and a...
Read More
Network services

The Role of Network Integration in Telecom Companies

Network services integration and management are a significant deal. The richness of new telecom technology, whether on-premise or cloud-based, makes...
Read More
Optical Fiber

10 Tips for Simplifying the Installation of Optical Fiber Cables

Installing optical fiber cables can be a complex and time-consuming task. It is crucial to have a well-planned and executed...
Read More
Data Localization

How Would Data Localization Benefit India?

In this age of data ubiquity, localization policies' emergence and wide adoption is a story to be told. India finds...
Read More
Email Security

Complete Guide to Managed Email Security Services

Our email inbox is the gateway to our organization and needs special protection. In recent times, email attacks have become...
Read More

Our Services

Network services

The digital ecosystem and landscape is rapidly to mirror the continuous evolution of communication infrastructure, connectivity, and next gen use cases...
Read More

Fiber Roll out Services

We offer a dependable fiber-based backhaul solution that promises seamless high-speed connectivity and increased reliability for a better network experience...
Read More

Managed Services

We encourage customers to seize business opportunities by simplifying network management and maintenance, which standardized SLAs govern...
Read More

Data Centre Network

Future use cases will require cloud-native infrastructure. With our network transformation services, we out-innovate the current constraints in the data center space...
Read More

RAN Services

The approach of RAN network disaggregation comes at the expense of increased integration touch-points and engineering efforts...
Read More