Business Briefing:
Telecommunication Systems-Overview of Telecommunication Systems-Fujikura Ltd.
Noriyuki Kawanishi,Corporate Officer and Head of Telecommunication Systems Business Unit
March 22, 2024

Contents
1. Business Overview

・・・・・・・・ 2

2. Achieving 2025 Mid-term Management Plan ・・・・・・・・ 101

1. Business Overview

2History of the Fujikura Group In our nearly 140-year history, since our founding in 1885, we have innovated and applied ourproprietary technologies to create new products based on changes in society.
1974
Began evaluation ofmanufacturing optical fiber
preform by CVD method

1935
Patent acquired on theFujikura’s proprietaryhigh-frequency coaxialcable2020

1985

Developed world’s first corealignment optical fiber fusion
splicer2009

Began manufacturing fiberlasers

1957

2007

Began manufacturing
wiring harnesses

Achieved the criticalcurrent world record
with an Yttriumbased oxide
superconducting wire

1943

1979

Began manufacturing
Fujikura-type 100 kW
coaxial cables

Began manufacturing FPCs
(Flexible Printed Circuitboards)Fujikura’s cold plates usedin the Fugaku
supercomputer

2023
Increased production of rareearth-based high-temperature
superconducting tapes forsmall fusion power plants

The Beginning(1885-)

2nd Phase of Reinvention(1945-)

3rd Phase of Reinvention(2005-)

Known for its technology, Fujikura has contributed to thecreation of an abundant society by establishing electric
power and communications infrastructure

Expansion into the power and telecommunication
systems, promoting diversification, globalization, andnew businesses

Set forth a long-term vision and pursued further
technological development and market access3

History of Telecommunication Systems
 Fujikura began developing optical-related technology in the 1970sin anticipation of the growing use of the Internet
1974
Launched review ofmanufacturing opticalfiber preform

2018

Released world’s highest fiber
density cable 6,912F Wrapping
Tube Cable™(WTC™)

2012
1983

Commercialized Spider Web
Ribbon (SWR™) andWrapping Tube Cable(WTC™)

Began laying optical fiber using
VAD method

1985

Developed world’s first core alignment
optical fiber fusion splicer

1991
Developed multi-core
optical fiber connectors

1990s-2010s

1981

Innovative opticaltechnology to meetdemand for multi-fiber,
smaller diameter, andsmaller size

1988

1984
Established joint
venture in USA(Now AFL)

Landline era

2023:

Globally expanded
optical solution products

Developed Japan’s firstOPGW

Developed world’s first multi-core
optical fiber fusion splicers

Dawn of Internet(Computercommunication era)

EarlyInternet
adoption

Spread of broadband

Spread of cloudservices

Spread of AI4

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Infrastructure
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Business Fields

 Contributing to the society by delivering innovative optical wiring solutions for development oftelecommunications and data center infrastructure

Data centers
Mobile networks(5G)
FTTx networks
Smart communities
Smart factories5Information
Storage
InformationInfrastructure
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Terminals

Main Products and services
Optical fiber

Optical cables
SWR™& WTC™ / Optical cables

OPGW / ADSS

Optical connection equipment andcomponents

Fusion splicers

Engineering

Optical connectors / Wiring components /Optical devices

Fusion splicers for telecommunications and plants

FTTx, 5G, and DAS design and construction

Optical fiber and optical fiber preform
for communications

PANDA / Image fiber6

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Global Business Structure Our global manufacturing and sales bases allow us to swiftly and flexibly address customer needs inAmericas, EMEA and APAC

2024
New plant in Poland

USA
South Carolina
Washington
California
Mexico2023
Enhancement ofplant in Mexico

2024
Enhancement of plant inSouth Carolina(SWR™ manufacturing)UK
Germany
PolandUAE

Manufacturing base2025
New Sakura SWR™ Plant

Japan
China (Shanghai)
Hong Kong
VietnamSingapore
Australia
Sales base7

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Net Sales by Region

Main customers: Telecom companies
Main products: Optical fiber
Optical cable
Optical connection
equipment andcomponents
Fusion splicers

OtherJapan
20.1 billion 12.0 billion
yenyenMain customers: Telecom companies,
HSDC
Main products: Optical cable
Optical connection
equipment andcomponents
Fusion splicers

Europe23.3 billion
yen

FY2023(first nine months)

219.5 billion yen
Main customers: Telecom companies,
Railways,
CATV, HSDC
Main products: Optical fiber
Optical cable
Optical connection
equipment andcomponents
Fusion splicers

North America
164.1 billion yen

Main customers: Telecom companies,
CATV, HSDC,Power companies
Main products: Optical cable
Optical connection
equipment andcomponents
OPGW
Fusion splicers
Engineering
Prepared based on p. 16 of quarterly report for 3Q FY3/2024
8

Information
Storage
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Infrastructure
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Terminals

2025 Mid-term Management Plan Targets

 We aim to improve profitability to surpass 50.0 billion yen in operating income and a 15% operating
marginOperating Income Over TimeNet Sales Over TimeOperating Margin(Billion yen)

15.1%

3,500
350.0

(Billion yen)

3,000
300.0

500
50.0

2,500
200.0
2,000
150.0
1,500

400
40.0

294.4

100.0
1,000(288.6)

50.0
500

Plan00<Exchange rate>

305.0

330.0

300
30.0
200
20.0
100
10.0

37.4

40.0

50.0(37.5)
Plan0020232023(Latest forecast)(Initial plan)

2024

2025

USD=143.75(Plan: 130.0)

USD=120.00

USD=120.00

2023
2023年
(Latest forecast)（期初計画）<Exchange rate>

USD=143.75(Plan: 130.0)

2024

2025

USD=120.00

USD=120.00

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2. Achieving 2025 Mid-termManagement PlanInformation
Storage
Information
Infrastructure
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Terminals

SWR™/WTC™ -Focus Areas and Targets- Focus on further increase market penetration in North America and the UK, and further expand sales
in the Middle East, Europe, and Australia
 Promote product development to address diverse customer needs, including telecommunications
companies and HSDCs
60,000

USAEuropeJapan

OtherNet Sales of SWR™/WTC™ by Region Over Time

30,00020,00050,000Core length
10,00040,000030,000(10,000)

20,000(20,000)

10,000(30,000)

0(40,000)

FY2018FY2019FY2020

FY2021

FY2022

FY2023(Latest forecast)

FY2024(Plan)

FY2025(Plan)

11

Information
Storage
Information
Infrastructure
Information
Terminals

SWR™/WTC™ - New Factory of SWRTM and Strengthen competitiveness-

 Increase capacity to meet growing
demand and strengthen costcompetitiveness for the future New Factory Carbon Neutral Plan
Carbon neutrality is also a source ofcompetitiveness.

▼Rendering of the factory▼New factory under construction

CO2Emission

EnergySaving（Do Nothing）

EnergyGenerating
EnergyPurchasing

Emission

012Information
Storage
Information
Infrastructure
Information
Terminals

SWR™/WTC™ - Response to BABA- Set up SWRTM/WTCTM manufacturing in the U.S. in response to BABA* and capture demand for
ultra-high-density high-fiber-count optical cable (WTCTM ), even after operation of BABA
commences in 2024.
Current flow
New flow

PreformBABA

Fiber ManufacturerTelecommunicationcompanies

Procure fiber in the U.S.
through a strategic allianceSWRTM productionin the U.S.

Bare Fiber

Provide(using government subsidies)

ProvideNon-BABA

Supplies to AFL

SWRTM

WTCTM

WTCTM production

HSDC, Telecom
companies, CATV, etc.
Provide(not yet usinggovernment subsidies)*Build America Buy America Act
13

Strengthen the optical connection equipment and components production structure Strengthen global structure with an eye toward the expanding demand for hyperscale data center (HSDC)
investment in the U.S. and Europe.

SeattleDublinAmsterdamLondon

DallasKatowice

ParisChicago

Silicon Valley

Frankfurt

AFL Telecommunications Poland
Established:
2023
Location:
Katowice, Poland
Business description: Manufacture and sale of opticalcomponents, etc.
Production capacity: Plans to secure eight lines in the next
two years
Employees:
Around 300 (plan after plant
operation commences)

Virginia
New York

Mexico: Monterrey

AFL Telecommunications (Monterrey)
Established:
Location:

1999
Monterrey, Mexico(two hours from the Texas, U.S. border)
Business description: Manufacture of optical components, etc.
Employees:
Over 5,000 (plan after new plant operationcommences
As of 2023, currently building a new plant to further boost production
capacity. Plans to double plant site area after operation commences.
14

Disclaimer:
Statements about financial forecasts and other forward looking statements in this document are based on the latest information available to the Company andcertain assumptions deemed reasonable at the time. Fujikura does not guarantee the achievement of these forecasts. Actual results may differ due to various
factors.

15

Business Briefing: Telecommunication
Systems-Data Center Market Outlook and Our Strengths-Fujikura Ltd.
Kansei Shindo,General Manager, Optical Component Division,
Telecommunication Systems Business Unit
March 22, 2024

Contents

1. Market Environment

・・・・・・・・・・・

2

Further Expansion of Data Center Market
2．
arising from AI Demand・・・・・・・・・・・

6

Necessity of Small Diameter and High3．
Density : Strengths of Our Products

・・・・・・・・・・・

9

4． Addressing Workability Improvement

・・・・・・・・・・・

131

1. Market Environment (Global Trends in Data Traffic)
 Data traffic is expected to increase by 400 times over the 10 years since 2020
(Streaming media, data monitoring, sensors, social media, remote learning, AR, VR, online games, andonline applications are the major drivers of the growth.) About 80% of data traffic is within/between cloud data centers (DCs) Increasing demand for high-capacity, high-speed, low-latency communications
 Increasing demand for multi-fiber and higher density optical cables/connectivity in addition tohigher speed optical transceivers
Data Traffic Prediction(zb)※Global IP Traffic（2021）
Non-DC 1.3％

400

DC-to-User350

Within DC

300

14.7％

DC-to-DC

250
200

13.4％

150

100

70.6％

5002018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

※zb (zettabyte) is 10 to the 21st power
Source：IoT Times, How to Avoid HPC Data Traffic Jams with High-Speed Interface IP (2020/12); IBS, Impact of AI on Electronics and Semiconductor Industries (2020/04)
Cisco Systems, Cisco Global Cloud Index: Forecast and Methodology, 2016-2021 (2018/02); Cisco Systems, The Zettabyte Era: Trends and Analysis (2017/06)
Pie chart produced in-house based on Cisco data2

1. Market Environment (DC Decentralization)
 Decentralized data processing and power consumption for diverse services
 Communication networks between DCs also need to support low latency, etc.
 Increased demand for data center to data center and edge DC optical cable/optical connectivity

Current

Centralized NetworkFuture

Decentralized Network(Ultra-high-speed/Ultra-low-latency)

Central DC

PC/Smartphone

FAAuto Robot
mobileDrone31. Market Environment (High-speed Optical Transceivers)
 Increasing need for high-capacity, high-speed and parallel transmission optical transceivers
 Large-scale DCs drive demand for single-mode fiber (SM)-type optical transceivers for
medium-haul transmission applications
Optical Modules by Data Rate
800G
400G
200G
100G(mil.units)

30

20

100

2022

2023

2024

2025

2026

2027

2028

Source：OMDIA, ICP Data Center Network Optical Components Forecast, 2022–28 (2023/06)
Chart produced in-house based on the data above41. Market Environment (Increasing Demand on Single-mode Fiber) Increase in transmission methods using single-mode fibers capable of high-speed transmission⇒ Demand on single-mode fiber wiring increasing year after year
Difference between Single-mode andMultimode Fibers

ICP Data Center Modules
100G+ Single-mode Duplex

100G+ Single-mode ParallelCore

100G+ Single-mode（Total）
100G+ Multimode

CladClad

100G＋ Multimode（Total）

101

35
CladCore

300-order Mode

101
Single-mode Fibers: Small Dispersion

CladSecond ModeFirst Mode 0-order Mode
Third Mode

Core

25

101

1?1
Multimode Fibers: High Dispersion

20

Multimode fiber has higher dispersion than singlemode fiber; this characteristic limits transmission
speed.

15
105

 There is growing demand for single-mode fibers,
where Fujikura has competitive edge.

0（mil. units)

Core

2022

2023

2024

2025

2026

2027

2028

Multimode Fiber CAGR(2023-2028) ▲22％

Source：OMDIA, ICP Data Center Network Optical Components Forecast, 2022–28 (2023/06)
Chart produced in-house based on the data above52. Further Expansion of Data Center Market arising from AI Demand (1/3)
 The prediction for generative AI through the 2030s is that it will be utilized in text, coding, images,videos, 3D, and gaming, in that order Global generative AI market size is expected to grow to about 14 trillion yen by 2030, at a CAGRof 35.6% during the period from 2022 to 2030
Generative AI Applications:
Open AI’s ChatGPT is just the tip of the iceberg

Global Generative AI Market Size:
2030：14 trillion yen
14.2

1510

CAGR 35.6％

51.202022

2030（Source）investigation byGrand View Research Inc.

（Source）Rapidops

Source：Rapidops, Generative AI Application Landscape (2023/03)
MIC, WHITE PAPER Information and Communications in Japan (2023/07)
Chart produced in-house based on MIC/Grand View Research data6

2. Further Expansion of Data Center Market arising from AI Demand (2/3)
 Expansion of cloud DC demand arising from expansion of AI demand High-speed, large-capacity transmission processing within AI-related facilities

Growth Trend of Optical Transceiver for AI and Non-AI Applications（Mil. units）
45.0

1.6T

40.0

800G

35.0
30.0

ForAI Server400G

25.0

1.6T

20.0

800G

15.0

400G

10.0

For Non-AI
Server200G
5.0

100G
Transceiver

-2021

2022

2023

2024

2025

2026

2027

2028

2029

Source：LightCounting, January 2024 Optics for AI Clusters (2024/01)
Chart produced in-house based on the data above7

2. Further Expansion of Data Center Market arising from AI Demand (3/3)
 Increased demand for optical cable/optical connectivity for AI-related facility
 High-speed data transmission occurs between GPU servers in AI-related facility
 To accommodate higher data transmission speed, GPU servers are optically interconnected thus
this requires a large number of single-mode fibers
Difference in Optical Wiring Volume between CPU and GPU Servers
General Cloud Network

HPC・AI Network

User

User

Response

RequestResponse

NetworkNetwork

Network Switch

Network Switch
Distributed Processing
Synchronization

Serial Processing

Function

RequestFunction

Node

Function

Node

Node

NodeGPU Server

GPU Server
Node

CPUサーバー
CPU Server

NodeGPU Server
Source: macnica, How to Build a Server Network Considering Distributed Processing of AI(September 2021) (parts written by us)

83. Necessity of Small Diameter and High Density : Strengths of Our Products (1/4)
 Support for DC-interconnect optical wiring (between areas) For optical cables connecting DC areas, there is an increasing need for small-diameter highdensity air-blown WTC cables due to the efficiency of using cable laying ducts

Wiring between
DCキャンパス間配線
DC Campuses

Wiring between

Wiringwithin DC
DC内配線

DCキャンパス間配線
DC Campuses

DC内配線
Wiring within DC

Carrier Cable

DC Campus

Carrier Cable

DC Campus

Carrier Cable
Carrier Cable

Carrier Cable
Carrier Cable
DC Interconnect

DC Interconnect

DC Campus

Wiringbetween Areas

Carrier Cable
Carrier Cable

DC Interconnect

DC Interconnect

DC Campus

Air-blown - WTC
Air-blown Installation
Cable Reel
MethodPneumatic

Cable Slimming TechnologyDevice
Guide Duct
Hydraulic

Joint of Duct
ManholeMicroduct

Pneumatic
Pressure Supply

Fiber Diameter：250um

200um

160um

Multi-core
Fiber93. Necessity of Small Diameter and High Density : Strengths of Our Products (2/4)
 Support for inter-DC optical wiring
 For optical cables connecting DCs with large campuses, there is an increasing need for smalldiameter high-density WTC cables, closures, and terminated racks due to the efficiency of using
cable laying ducts
Indoor WTC

Termination RackServerServer
Indoor WTC

SpliceTermination
RackRack

Ultra-high-fiber-count SWR/WTC

Closures

Carrier Cable

DC Campus
Carrier Cable
Carrier Cable
Carrier Cable
DC Interconnect

DC Interconnect

DC Campus

Inter-DC Optical Wiring（DCI）
10

3. Necessity of Small Diameter and High Density : Strengths of Our Products (3/4)
 Support for expanding intra-DC optical wiring
 Optical cross-connect interconnection between GPU Servers to perform the vast amount of processing requiredin AI with high capacity and low latency ⇒ Increased optical wiring volume
 Small-diameter, high-density wiring technology: Indoor SWR/WTC and MPO/MMC: Increasing need forcompact multi-fiber connectors
Patch Panel

SwitchSwitchSwitchSwitchSWR/WTC

MPO/MMC
Cable Assemblies
SwitchSwitchMPO/MMC Patch PanelAI
ServerGPU

GPU

AI
Server

GPU

GPU

AI
ServerGPUGPU

MPO/MMC Patch PanelAI
ServerGPU

AI
ServerGPU

AI
Backend
NetworkGPU

GPU

AI
ServerGPU

GPU

AI
ServerGPU

GPU

AI
ServerGPU

GPU

11

3. Necessity of Small Diameter and High Density : Strengths of Our Products (4/4)
 Next-generation ultra-compact MMC optical connectors
MMC optical connectors: Next-generation 3x high-density multi-fiber optical connectors based on proven international
standard MPO optical connector basic technology
MPO-16

MMC-16（3x High-density）

1,152 fibers/1RU

1,152 fibers/1RU

MPO Optical Connector

MMC Optical Connector

fibers/connector

Number of Fully-mounted Fibers per Rack Unit（）Number of Fully-mounted Fibers per 1RU

fibers/1RU

12

4. Addressing Workability Improvement (1/2)
 Pre-connectorized optical wiring material Rapid expansion of DC construction increases construction needs, but securing construction
resources is a challenge Pre-connectorized WTC with multi-fiber connectors with towing ends reduces on-site
installation time

Termination Rack

Termination Rack
TrunkCable

ServerServer

TrunkCable

Pre-connectorized Optical
Cable with Pulling Grip
ServerServer

Termination
Rack

Termination
Rack

ManholePre-connectorized
Cables for Network
Build13

4. Addressing Workability Improvement (2/2)
 Single-fiber and multi-fiber fusion splice-on connectors for a variety of installation applications
 Optical connector cleaner to reduce work time
Splicer
FuseConnect™ Splice-on Connectors

Single-fiber

Pen-type optical connector cleaner with excellent
usability

Multi-fiber

New product withimproved workability

Multi-fiber

Single-fiber
14

Disclaimer:
Statements about financial forecasts and other forward looking statements in this document are based on the latest information available to the Company andcertain assumptions deemed reasonable at the time. Fujikura does not guarantee the achievement of these forecasts. Actual results may differ due to various
factors.

15