According to a new market study, titled "APAC Submarine Cable System Market Forecast to 2028 - COVID-19 Impact and Analysis - by Service (Installation Services and Maintenance & Upgrade Services), Application (Grid Interconnection, Offshore Wind Power, and Communication)," the APAC submarine cable system market is expected to reach US$ 235.85 million in 2021 to US$ 546.78 million by 2028. It is estimated to grow at a CAGR of 12.8% from 2021 to 2028. The report provides trends prevailing in the APAC submarine cable system market along with drivers and restraints.
Fiber-optic cables that are laid in the ocean, known as submarine cables, are responsible for carrying more than 99% of intercontinental communication traffic, and thus are the hidden facilitators of worldwide connectivity. The future of adopting optical submarine cable systems is expected to enhance network configuration flexibility and transmission capacity. Advancements in technology for configuring the mesh network will play a critical role in improving network configuration flexibility. Furthermore, the trend in submarine cable installations is moving towards projects led by over-the-top (OTT) hyperscalers, rather than consortium cables. Tech giants like Google, Facebook, Microsoft, and Amazon are investing heavily in data centers and cable projects worldwide, including in the Asia Pacific region. This surge in demand from content providers for data centers is creating a potential growth opportunity for the APAC submarine cable system market.
The Asia Pacific region is home to many developing countries that are transitioning into digital economies. The rapid growth of digital economies in the region has led to an increased need for cloud and 5G services, driving up demand for data bandwidth. The underwater cable network is a crucial component of the telecommunications infrastructure. The advancements in technology, such as artificial intelligence, machine learning, and faster connectivity with 5G, are expected to have an impact on the submarine cable infrastructure. According to a Cisco report, the number of internet users in the Asia Pacific region is set to reach 3.1 billion by 2023, up from 2.1 billion in 2018. In June 2020, the Asia Direct Cable (ADC) Consortium appointed NEC Corporation to build a 9,400 km submarine cable connecting Hong Kong, China's Guangdong province, Japan, the Philippines, Singapore, Thailand, and Vietnam. The project is slated to be completed by the fourth quarter of 2022. The increasing demand for social networking sites and cloud storage is changing the business prospects for submarine cable systems. The growing number of social media platform users, along with the rising need for higher bandwidths, is driving the demand for submarine cable systems in the APAC region.
In addition to the growing demand for cloud and 5G services, the potential for offshore wind energy in Asia Pacific countries is also driving demand for submarine cables for cross-border electricity trading. According to the Global Wind Energy Council, China is expected to maintain its dominant position among Asian offshore wind markets in the first half of this decade, with a market share of over 70%. Moreover, the number of utility-scale offshore wind projects being connected is increasing in emerging countries like Taiwan, Japan, South Korea, and Vietnam. This rapid growth in offshore wind energy production from Asia Pacific countries is expected to further propel the submarine cable system market size in the coming years.
Indonesia currently holds the largest market share of the APAC submarine cable system market, followed by Malaysia and India. In India, telecom companies are striving to introduce 5G networks for commercial use by 2022, driven by the growing demand from social media users. The increasing number of upcoming projects for constructing submarine cables is further fueling the demand for installations, driving the growth of the APAC submarine cable system market. For instance, in May 2021, Reliance Jio Infocomm Ltd. announced the construction of the India-Asia-Xpress (IAX) system, which will be the largest international submarine cable system in India, providing express connectivity from Mumbai and Chennai to Thailand, Malaysia, and Singapore. This growing investment trend in deploying higher bandwidth is driving the demand for submarine cables, which is propelling the growth of the APAC submarine cable system market.
The growth in offshore growth in offshore wind power capacity from Asia Pacific region along with increase in grid connectivity are the prominent factors driving the APAC submarine cable system market growth over the forecast period.
The global COVID-19 crisis had a significant impact on APAC countries, including China, India, and Japan, particularly in 2020. The resulting lockdown measures and the slowdown of manufacturing industries in these countries led to a decline in the production of submarine cables. While the closure of manufacturing factories did not have an immediate impact on global connectivity, it delayed the deployment of new systems. However, in 2021 and beyond, the APAC submarine cable system market is expected to recover from the impact of COVID-19, with the resumption of projects for renewable energy grids and communication networks. The analysis of the APAC submarine cable system market is primarily focused on new upcoming developments, investments, and macro and micro factors in the post-pandemic scenario that influence the growth of the APAC submarine cable system market.
Airtel's recent inclusion in the SEA-ME-WE-6 undersea cable consortium in February 2022 is expected to drive the APAC submarine cable system market growth over the forecast period. These initiatives to enhance internet bandwidth in the post-pandemic scenario are particularly significant for serving the fast-growing digital economy of India, where there is an increasing demand for cloud services, 5G, and social media platforms, requiring higher bandwidth and faster connectivity.
NEC Corporation, S. B. Submarine Systems Co., Ltd., SubCom, LLC, NTT WORLD ENGINEERING MARINE CORPORATION, and Alcatel Submarine Networks are key the APAC submarine cable system market players profiled in the research study. These players adopt organic growth strategies, such as product launches and expansions, to sustain their position in the APAC submarine cable system market.
The report segments the APAC Submarine Cable System Market - by Service and Application
By Service
By Application
Communication
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