Page 30 - Analysis Report of Global Market in the Submarine Cable Field (2017)
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Wire and Cable

          Although the domestic submarine optical cable started late, after   Figure  14  Global  newly  constructional  submarine  optical
          many years’ technology accumulation of domestic enterprises,   cable market share (Statistics of 2015-2018)
          current submarine optical system competition capacity has developed
          dramatically. Chinese enterprises not only expanded the investment in
          research and development, but also utilized their relevant advantages
          in other fields to cooperate with abroad famous companies, forming
          the advantage complement thus to be possible to take more important
          position in international submarine optical cable market. After recent
          years of technology accumulation, HUAWEI Marine has formed a set
          of complete industrial chain integrating communication transmission
          product research and development, marine construction, later period
          maintenance, and system upgrades and expansion into one body, who
          also possesses the qualification and capability of marching to long
          distance deep marine market. In aspect of providing turnkey solution,
          Huawei Marine has the capability of competing with first class
          enterprises of European and American countries, as well as Japan.   By the end of 2015, the French Alcatel Lucent built up submarine
                                                                 cable length of 575 thousand kilometers globally, which is the leading
          In addition, Chinese enterprises have largely promoted research   submarine cable system providing enterprise in the world. American TE
          and development of submarine optical cable, whose technology and   Subcom’s laying length reached 490 thousand kilometers, while Japan
          strength have reached world class level. Technology is no longer   ese NEC’s laying length was up to 220 thousand kilometers. In recent
          the insurmountable barrier. However, being limited to the lower   years, affected by global competition and rapid capacity improvement
          international recognition degree and case experience, Chinese companies   of HUAWEI, Alcatel Lucent has always been in loss statement. At
          do not have too much speed rights. With the roles played by HUAWEI   the same time as the construction of global submarine cable was in
          Marine and relevant companies on international submarine cable stage   the  trough  in  previous  years,  the  submarine  cable  business  is
          being recognized more and more, China’s submarine cable and relevant   also marginalized within the group gradually. It even planned to separate
          companies are expected to usher in the best time of development.  its submarine business as a private company for sale, list it on stock
          Table 7  The international submarine cable construction statistics of   separately in the end of 2015.
          HUAWEI Marine , 2014-2018
                                                                 In  2015,  NOKIA  announced  the  acquisition  of  the  French
                                                                 Alcatel Lucent, including its submarine cable business. The prospect
                                                                 of French Alcatel Lucent’s submarine cable business still remains
                                                                 uncertain currently, whose original market share for submarine cable
                                                                 have already been taken by other giant enterprises. It means also the
                                                                 market is about to usher in some new opportunities.
                                                                 Figure  15  Mileage  Statistics  of  Huawei  Marine’s  contracted
                                                                 construction of submarine fiber optic cable



          5. Competition pattern changed, Chinese enterprises ushered in
          development opportunities
          International pattern of competition started changing, HUAWEI Marine
          rises rapidly.

          Submarine cable technology is rather complex. Global submarine cable
          supplier  are  mainly AmericanTE  Subcom, Alcatel  Lucent
          and Jananese NEC. They are the only three enterprises who can
          deal with the submarine cable below the deep sea depth of 3000
          meters in the world. Before 2014, more than 90% of the global market
          were monopolized by these three companies, even NEC, who has the   HUAWEI Marine has rapidly risen from the market with its own
          lowest market share accounted for about 12%.           experience in the field of communications technology, phase modulation,
          Figure 13 Market share of global newly constructional submarine   high-capacity OTN technology, as well as the marine construction and
          optical fiber cables (Statistics of 2004-2014)         maintenance experience of its global maritime companies. At the same
                                                                 time, it has strong advantage in terms of equipment prices. For example,
                                                                 the high-power laser equipment required by a group of the Atlantic
                                                                 submarine cables only cost one third of competitors. It’s goal is to be
                                                                 listed in the industry's top three.

                                                                 In 2014, the Hibernia submarine cable project of 4600km was taken
                                                                 by TE Subcom company because the U.S. government had concern on
                                                                 Huawei’s network security, which made HUAWEI lose the chance of
                                                                 earlier opening ocean cable market. In 2015, HUAWEI announced the
                                                                 contracted construction of the Brazil - Cameroon turnkey marine project,
                                                                 and finally had the opportunity of showing itself in the international
                                                                 long distance cable market. We believe that by this project experience,
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