The China Ministry of Information Industries has bad news for suppliers of optical fiber telecommunications equipment: China may be joining the rest of the world in an oversupply of optical networks.
A panel of experts told the Ministry that a rush of foreign and domestic suppliers into the China market threatened to create a glut that could have a similar devastating impact as in the rest of the world.
The panel said there are currently 10 plants in China alone building fiber optic transmission equipment. That could lead to annual production in China of 35 million kilometers of fiber by 2004, although demand then will be only 20 million kilometers.
The Ministry itself put out a forecast that warned starting in 2002, there could be a surplus of fiber production in China.
The panel urged the China government to take measures to cull back the rampup of fiber cable and equipment production.
Foreign suppliers could be especially hard hit. The China telecommunications infrastructure market has been one of the few bright lights in an otherwise dismal global market. Should China become saturated, that could disrupt the last remaining strong global infrastructure markets.
The Ministry of Information Industries predicted that by 2005 China's optical communications market would total $5.14 billion for optical transmission equipment, or 12.4% of the global market. Optical and electronic devices for the market would total $2.7 bilion, also 12.4% of the world market. Fiber optic cable would total $1.6 billion, or 11.3% of the global market.