▲ Inside the server room of a national AI data center (
File Photo
While optical fiber is emerging as a core material for data infrastructure in the artificial intelligence (AI) era, a suggestion has been raised that South Korea lacks high-value-added material production capabilities and needs policy support to address this gap.
The Korea Institute for Industrial Economics and Trade (KIET) made the assertion in a report titled "Optical Fiber in the Spotlight in the AI Era: South Korea's Current Status and Tasks" released today (August 17).
Unlike copper wiring, where signal attenuation, heat generation, and power consumption surge as transmission distances increase, optical fiber has established itself as an essential foundational infrastructure handling connections both inside and outside data centers.
According to specialized research firm CRU, demand for optical cables for AI surged 137% in 2024, followed by another 77% increase last year, and is projected to grow at an average annual rate of 26% through 2029.
The share of optical fiber demand for data centers out of global demand is also expected to expand from less than 5% in 2024 to about 30% by 2027.
Amid increasing investments in submarine cables, the demand and prices of optical fiber are on a steep upward trend.
The report explained that global leading companies in the US, Japan, and elsewhere are expanding into premium products by vertically integrating everything from the in-house production of preforms (raw materials)—where added value is concentrated—to optical cables.
In contrast, domestic companies were evaluated as showing technical and structural limitations.
Because preforms require nanometer-level refractive index control, only about 20 companies worldwide are capable of producing them.
Domestically, only Taihan Optical Communication is capable of producing preforms.
However, the report noted that the company is unable to mass-produce top-tier premium products, and next-generation technologies (MCF and HCF) remain at an early stage.
South Korea's optical fiber exports fell at an average annual rate of 22.3%, dropping from $58 million in 2022 to $27 million in 2025, while the export unit price fell from $81 per kilogram (kg) to $63.
The report analyzed that domestic exports have been pushed out by low-price offensives from China and India as they are concentrated on general-purpose optical fibers.
The report evaluated that unlike countries like China, Japan, and the US, which supported the establishment of optical fiber supply bases or demand generation, South Korea's policy support system has been inadequate.
It recommended pursuing mid-to-long-term policies centered on securing high-value-added preform manufacturing capabilities and next-generation optical fiber technologies.
First, it emphasized including premium optical fiber preforms among core strategic technologies for materials, parts, and equipment to establish a foundation for research and development, tax benefits, and policy financial support, while also stabilizing the supply chain for upstream raw materials.
In addition, it added that next-generation optical fiber original technologies should be secured through government-led large-scale R&D, and demand bases should be established by increasing the utilization of domestic materials in national infrastructure projects such as power and communication networks.
(Photo provided by NHN, Yonhap News)
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.