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July 10, 1990

NOW SIEMENS, CORNING PULL OUT OF JINXED SPANISH FIBRE OPTIC CABLE VENTURE

By CBR Staff Writer

Siemens AG and Corning Glass Works have withdrawn their support from Tefosa, the company that was about to install an optical fibre factory in Asturias in Northern Spain, reports Cinco Dias. Siecor, the company set up by the two multinationals for this project, defended its actions by citing the indifferent medium and long-term prospects in the fibre optic market because of the fall in prices and the uncertainty of contracts from the main customer and thus standards-setter, Telefonica de Espana SA, which meant that the $23.4m investment had no guaranteed return. Tefosa was set up in July 1989 with a capital injection of $7.9m contributed by General Cable subsidiary, Cables de Comunicacion, Sociedad Regional de Promocion, Siecor and the German company RXS. The plan was to start building before the summer and start manufacturing in 1991, eventually producing 300,000 yards of optical fibre per year. The plant would have created 100 jobs. The original planned output from the plant was to be 70,000 yards a year, but Siecor persuaded the other partners to up production, which is why Tefosa is amazed by Siecor’s latest decision. Tefosa thinks that Siecor’s fears are unfounded given the characteristics of the new factory, which should mean low costs – furthermore, the fibre optic market has not yet reached saturation point. However, Telefonica already has its official suppliers Alcatel and Cables de Communicacion, as well as Cables Pirelli for ad hoc supplies, so that Tefosa would have to get its products into smaller or foreign markets where the competition is much greater. Although this is the third time the project has fallen through since 1985 (ATT and Corning Glass withdrew on previous occasions), Cables de Communicacion is hoping to pursue its plans by finding new technological partners either from technology transfer with Corning, or with Japanese companies Sumimoto and Fukurawa.

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