CommScope To Increase U.S. Based Manufacturing Capabilities for Fiber Connectivity Products

Rhea-AI Summary

CommScope (COMM) announces plans to expand production for fiber-optic connectivity products to meet the demand for Build America Buy America (BABA) compliant products. The expansion aims to support the increasing need for broadband networks in rural areas, with production set to begin in Q3 of 2024.

Insights

Market Research Analyst

The announcement by CommScope to expand production for its fiber-optic connectivity product portfolio is a strategic move that aligns with the increasing demand for broadband infrastructure, particularly in rural areas. The focus on Build America Buy America (BABA) compliant products indicates a response to federal procurement policies, which could give CommScope a competitive edge in securing government contracts. This expansion is likely to enhance the company's market share and could positively influence its stock valuation as investors often look favorably upon companies that capitalize on government initiatives.

Additionally, the mention of CommScope's previous success with over 2 million Fiber Optic Splice Closures (FOSC®) units shipped in the U.S. signals strong operational capabilities and experience in the sector. This track record may reassure investors of the company's ability to execute the planned expansion and meet the projected demand. The expansion's timing, set to meet industry demand by Q3 of 2024, suggests a forward-looking approach that may attract long-term investors seeking growth opportunities in the telecommunications infrastructure industry.

Financial Analyst

The expansion of CommScope's manufacturing capabilities is a significant capital investment that reflects the company's commitment to growth and could impact financial performance. By focusing on BABA compliant products, CommScope is positioning itself to take advantage of federal and state funding aimed at expanding broadband access, which could lead to increased revenue streams. Investors should monitor the company's quarterly financials for signs of increased capital expenditure in the short term, balanced against the potential for higher revenue as production ramps up and contracts are secured.

Long-term, the investment in U.S. manufacturing capacity could improve gross margins by reducing reliance on international suppliers and mitigating risks associated with global supply chain disruptions. This strategic initiative may also reflect positively on CommScope's ESG (Environmental, Social and Governance) profile, as domestic manufacturing aligns with social and economic sustainability goals that are increasingly important to investors.

Telecommunications Industry Expert

CommScope's expansion underscores a broader industry trend towards enhancing broadband connectivity, particularly in underserved rural areas. The company's emphasis on end-to-end network solutions and a product portfolio that includes FOSC®, fiber distribution cabinets and connectorized hardened and non-hardened fiber terminals, is indicative of a comprehensive approach to network construction and management. This strategy not only meets current federal requirements but also positions CommScope as a key player in the ongoing efforts to bridge the digital divide.

The reference to the HeliARC™ fiber-optic cable solution as a leading product in the BABA compliant portfolio highlights the importance of innovation in maintaining a competitive edge. As rural broadband initiatives continue to gain momentum, CommScope's expanded production capacity and product innovation could position it as a primary beneficiary of the infrastructure push, potentially leading to increased market demand for its connectivity solutions.

Production will create enough capacity to support demand due to BEAD funded projects, beginning summer of 2024

CLAREMONT, N.C.--(BUSINESS WIRE)-- CommScope (NASDAQ: COMM), a global leader in network connectivity, announced today it plans to expand production for its fiber-optic connectivity product portfolio. The manufacturing expansion will help address the projected increase in demand for Build America Buy America (BABA) compliant products manufactured and assembled in the U.S. The expansion will occur at CommScope’s existing facilities that drive manufacturing for its broadband portfolio.

The increased production will focus on CommScope’s fiber-optic connectivity products and solutions that target faster installation and more efficient construction of rural broadband networks. CommScope is committed to supporting its partners and customers with full end-to-end network solutions. Key products such as Fiber Optic Splice Closures (FOSC®), fiber distribution cabinets and connectorized hardened and non-hardened fiber terminals will meet the BABA domestic preference. Preparations are currently being implemented and production is planned to meet industry demand as soon as Q3 of 2024.

“We want to make it as easy as possible for our partners and customers as they access federal and state funding subject to BABA domestic preference requirements. We are eager to expand the U.S. manufacturing capacity of our fiber connectivity portfolio to support our partners and customers and the efforts to bring broadband to everyone,” stated Koen ter Linde, SVP & president, Connectivity & Cable Solutions. “As a U.S. manufacturer for over half a century with a focus on broadband network solutions, we’ve long been a proponent of bridging the digital divide. Regardless of what your network architecture is or what challenges you face, CommScope has solutions to help.”

This expansion will continue to build on CommScope’s success in rural applications having previously shipped over 2 million FOSC units in the U.S. over the past two years, which includes projects funded by the Rural Digital Opportunity Fund (RDOF) as well as other government funded initiatives to provide internet for all.

CommScope already produces an array of BABA compliant products and solutions at its U.S. manufacturing locations. The expansion will further augment CommScope’s BABA compliant portfolio, which is led by its HeliARC™ fiber-optic cable solution. Additional details on CommScope’s BABA compliant portfolio and timelines will be available later in Q1, allowing partners and customers to plan their upcoming government funded projects. Details on availability can be obtained through CommScope’s local sales representatives.

CommScope is thankful to the National Telecommunications and Information Administration (NTIA) for working with the industry and for the opportunity to collaborate throughout this process. We look forward to providing Broadband for Everyone™ solutions.

CommScope and the CommScope logo are registered trademarks of CommScope and/or its affiliates in the U.S. and other countries. For additional trademark information see https://www.commscope.com/trademarks. All other product names, trademarks and registered trademarks are property of their respective owners.

About CommScope:
CommScope (NASDAQ: COMM) is pushing the boundaries of technology to create the world’s most advanced wired and wireless networks. Our global team of employees, innovators and technologists empower customers to anticipate what’s next and invent what’s possible. Discover more at www.commscope.com.

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This press release includes forward-looking statements that are based on information currently available to management, management’s beliefs, as well as on a number of assumptions concerning future events. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, which could cause the actual results to differ materially from those currently expected. In providing forward-looking statements, the company does not intend, and is not undertaking any obligation or duty, to update these statements as a result of new information, future events or otherwise.

Source: CommScope

View source version on businesswire.com: https://www.businesswire.com/news/home/20240307563861/en/

News Media Contact:

Luke Hamer

Luke.Hamer@commscope.com

Financial Contact:

Massimo Disabato, CommScope

Massimo.Disabato@commscope.com

Source: CommScope

FAQ

What is CommScope's plan regarding production expansion?

CommScope plans to expand production for its fiber-optic connectivity product portfolio to address the projected increase in demand for BABA compliant products.

When will the manufacturing expansion begin?

The manufacturing expansion is scheduled to start in the summer of 2024.

What products will the increased production focus on?

The increased production will focus on CommScope's fiber-optic connectivity products such as Fiber Optic Splice Closures (FOSC®), fiber distribution cabinets, and connectorized hardened and non-hardened fiber terminals.

What is the timeline for production to meet industry demand?

Production is planned to meet industry demand as soon as Q3 of 2024.

Who is the SVP & president of Connectivity & Cable Solutions at CommScope?

Koen ter Linde is the SVP & president of Connectivity & Cable Solutions at CommScope.