Infinera onshores semiconductor production for BEAD compliance

Infinera will join the Build America, Buy America movement by bringing the manufacturing of its semiconductor components to the U.S. The company is joining a cohort of equipment providers that have onshored operations as the industry prepares for $42.5 billion in Broadband Equity, Access, and Deployment (BEAD) funding to hit the market.

To help operators comply with the BEAD program’s Build America, Buy America requirements, Infinera will leverage its optical compound semiconductor facility in California and testing and packaging facility in Pennsylvania. The provider noted domestic semiconductor production will enable improved supply chain security and resiliency for the U.S. telecom industry.

Infinera will also bring the production of its portfolio of ICE-X coherent pluggable transceivers to the U.S.

The company noted its coherent pluggables, based on the optical compound semiconductor indium phosphide, are a critical part of network infrastructure, and especially useful for the metro, middle-mile and access and aggregation networks that have been a large focus of BEAD plans across the nation. 

A growing number of companies have made investments to meet the expected demand from BEAD fiber projects and help companies comply with the National Telecommunications and Information Administration’s (NTIA) Buy America requirements for that program.

In August, Adtran announced plans to invest up to $5 million at its manufacturing facility in Huntsville, Alabama, to increase the production of telecom equipment. The expansion will focus on making more optical line termination (OLT) equipment and preparing to onshore the manufacturing of optical network terminals (ONTs).

The same month, Nokia announced it will team up with longtime manufacturing partner Sanmina to bring production of fiber network electronics to Wisconsin. And in May, India-based STL announced plans to open its first fiber optic cable plant in South Carolina. Others, including Corning, CommScope and Prismian Group have announced plans to ramp up their fiber manufacturing capacity in the U.S. with new facilities in Arizona, North Carolina and Tennessee, respectively.

However, some experts have warned that Buy America could pose a threat to U.S. fiber deployments, as sometimes there are no U.S. suppliers for certain components of fiber optic cables.

For instance, U.S. based Corning is a major supplier of the fiber cables that protect and organize the hair-thin strands of fiber optic glass. But even though Corning and others are making cables in the U.S., they probably have to source materials for those cables outside the country.

There is other equipment necessary for fiber deployments too, such as cabinets, splitters, optical line terminals and optical network terminals. And even though there are American manufacturers for the electronics, such as Calix and Adtran, their OLTs and ONTs include chips, which are often manufactured in foreign countries.

CEO of the Fiber Broadband Association (FBA) Gary Bolton said the fiber industry made great strides in 2022, passing 7.9 million homes with fiber. And it could pass another 9 million homes in 2023. But all this progress has been made without following strict Buy America mandates.

“This is a pretty sticky situation,” Bolton said earlier this year.

In an attempt to ease that burden on U.S. companies, the NTIA recently announced it will be waiving some of the Buy America rules for BEAD recipients. NTIA wrote that certain items “are not produced in the United States in sufficient and reasonably available quantities or a satisfactory quality that can fully comply with all requirements of the Buy America Preference under BABA.”

NTIA wrote that as part of its supply chain research, it found that semiconductors, which are key components to building broadband networks, are all currently manufactured outside the U.S. While Congress has passed the historic CHIPS Act to spur major investment in domestic semiconductor manufacturing, “the construction timeline and type of semiconductor fabrication plants mean that the impact of that investment is unlikely to be realized during the time period needed for the BEAD Program.”

More information on the NTIA’s proposed waivers to the Buy America requirements can be found here.