European bare fiber optic prices surged 159% year over year. Huiyuan Communications posted three consecutive limit-ups, and Changfei Fiber Optic continued to set new historical highs.

(Source: Caixin)

Guotai Haitong Research Report believes that the fiber optic demand within data centers driven by AI and in DCI (Data Center Interconnect) scenarios is expected to surge from less than 5% in 2024 to 35% in 2027, continuously boosting global fiber optic demand.

On April 7, fiber optic concept stocks repeatedly strengthened, with Huiyuan Communications (000586.SZ) hitting the limit-up for three consecutive days, Tongding Interconnection (002491.SZ) and Huamai Technology (603042.SH) hitting the daily limit, and Hengtong Optoelectronics (600487.SH) and Changfei Fiber (601869.SH) rising over 4%, setting new historical highs. Tongguang Cable (300265.SZ), Zhongtian Technology (600522.SH), and Changyingtong (688143.SH) also saw significant gains.

In terms of news, the fiber optic industry is experiencing a price increase wave. UBS’s latest research report cites data from industry research firm CRU, indicating that the price of European G652.D bare fiber optic cable reached €7.94 per kilometer in March (about $9.1), up 136% from January and 159% year-over-year.

China Galaxy Securities pointed out that from the supply side, the core driver of this round of price increases is the capacity bottleneck of fiber preform rods: fiber rods account for about 70% of industry profits, with high technical barriers and an expansion cycle of 18-24 months. After previous price wars and supply clearing, capacity expansion has been limited, leading to supply struggling to meet demand growth. Currently, global fiber rod capacity is approaching full utilization. Under capacity constraints, manufacturers are shifting fiber rod resources toward higher-value-added special fibers such as G.657.A2( for drones), G.654.E( for AI data centers), etc., squeezing the capacity of ordinary G.652.D fibers and exacerbating structural shortages. Overseas markets also face long expansion cycles for giants like Corning and Tohoku, making short-term supply gaps difficult to alleviate.

Overall, there is potential for further price increases across different types of fiber optic cables in the near future, and the profits from rising prices are expected to support R&D in cutting-edge technologies like hollow-core fibers, creating a positive feedback loop.

China Galaxy Securities recommends that the current round of fiber optic cable price increases is mainly driven by three emerging demands: first, the large-scale construction of AI data centers creating interconnection needs; second, the rapid growth of specialized applications such as fiber optic drones; third, the ongoing expansion of overseas infrastructure markets driving export demand. These demands are large-scale, and product structures are evolving toward high-end and specialized types, indicating that the fiber optic industry may experience a structural transformation. Investors should focus on core fiber optic cable manufacturers such as Changfei Fiber, Hengtong Optoelectronics, Zhongtian Technology, FiberHome Technologies, and Tongding Interconnection.

Guotai Haitong Research Report believes that the fiber optic demand within data centers driven by AI and in DCI (Data Center Interconnect) scenarios is expected to surge from less than 5% in 2024 to 35% in 2027, continuously boosting global fiber optic demand. The demand for G.654.E, hollow-core fibers, multi-core fibers, and high-density multimode fibers will grow rapidly.

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