Korea: Digital Boom Drives Growth

Fiber-to-the-Home (FTTH) are the magic words driving growth among Korea’s optical cable manufacturers, after the devastating dot.com melt-down triggered in 2000. Demand from FTTH comes from both domestic and overseas. Korean telecom companies have taken the lead in getting broadband connectivity into homes. Working in tandem with local fiber optic makers, the service providers have been able to make FTTH a viable proposition. The success of Korea’s digital economy is spurring interest worldwide for FTTH and optical cable makers expect to ride this boom out of the crushing depression they have been in.



According to the National Statistical Office, annual production capacity of Korea’s fiber-optic companies such as LS Cable, Samsung Electronics, and Taihan Electric Wire, has decreased over 70 percent from 1,669,494 km in 2000 to 605,822 km in 2003. The figure for 2004 indicates the end ofthe downturn and a new optimism driven primarily by FTTH. Last year, Korean makers produced 620,135 km of cable. They expect the upward trend to continue in 2005. Most companies are adding production capacity to fulfill demand from the FTTH sector. While the initial growth happened locally, demand is now expected to ride a strong export growth.







LC Cable, one of the pioneers in the FTTH arena, is receiving orders for its cables from countries such as Pakistan and Iraq. Yong Hyun Shin, the manager of telecom business support team at LS Cable, says, “Currently 60 to 70 percent of Korean households use copper cable for broadband service. However, cable will gradually be replaced by fiber optic. Also, our fiber optic business in the US (expected to grow 30 percent this year) and Europe (expected to grow 20 percent this year) seems very strong, while the markets of China, Thailand, Hong Kong, and South Asia are growing.” In addition, LS Cable plans to use its Vietnam factory as a strategic point to cover South Asia market.



Samsung (China) Hainan Optical Communication Corporation, the subsidiary of optical material business division of Samsung Electronics, is also expanding overseas. At present, the company has two plants in Korea and China and manufactures many products such as fiberoptic, optical cable, optical transceiver modules, and optical network devices. Samsung Hainan will put more focus on emerging LWPF (low water peak fiber) sector.



Says Byeong Woo Kim, the marketing manager, market division of Samsung Hainan, “FTTH market has continuously increased although optical network business is lessening owing to lower investments by telecom providers. The challenge in this industry is to gain bigger projects. Consequently, competition becomes more intense.” The company already received $30 million project from British Rail, as well as a $7 million order from Thailand.