The rise comes from "coincidence within inevitability." Is the optical fiber sector entering a major upward demand cycle?

Guolian Minsheng’s analysis points out that the current fiber optic cable industry’s upward momentum is essentially the result of both “inevitable trends and accidental catalysts.” The “inevitable” lies in the fact that, after years of capacity clearance, the industry’s supply structure has been significantly optimized, while the construction of AI data centers, the global digitalization process, and network upgrades constitute long-term demand support.

The “accidental” aspect refers to industrial catalysts such as major international tech firms signing large-scale long-term orders (for example, Meta partnering with Corning on purchases worth up to $6 billion), which have accelerated the manifestation of supply-demand tensions, leading to spot shortages, extended production scheduling, and prices entering an upward channel.

Against this backdrop, the industry is entering a new boom cycle driven by demand and characterized by rigid supply. From an investment perspective, focus should be placed on leading fiber optic cable companies directly benefiting from a rise in both sales volume and price, optical module manufacturers at the forefront of technological iteration, and providers of liquid cooling solutions emerging alongside high-density computing power demand.

AI Demand Accelerates the Formation of Fiber Supply Gaps

The report highlights that the fiber optic cable industry is entering a critical phase of restructuring supply and demand. According to Communications World Network, the current market is already showing signs of tight supply, with spot shortages of premium fiber products from leading companies, and some production orders now have scheduling cycles extended to several months.

The reversal in supply-demand dynamics is mainly driven by two factors: On the supply side, years of continued capacity clearance have significantly shrunk inefficient supply; on the demand side, the construction of AI data centers, global network upgrades, and expansion into overseas markets are resonating and pushing demand into a concentrated upward cycle.

From an industry perspective, fiber optic cable exhibits typical cyclical characteristics, with demand closely tied to the iterative pace of communication technologies and network construction investments. Reviewing the development history— from 3G commercialization and “Broadband China,” to 4G and fiber-to-the-home (FTTH), and on to large-scale 5G deployment— each round of telecom tech upgrades has driven fiber demand to new heights. At the same time, leading domestic companies have actively expanded into overseas markets, effectively smoothing out cyclical fluctuations in the industry.

It is worth noting that fiber preforms, the core raw material for fiber manufacturing, have a capacity-build cycle of approximately two years, often causing periodic supply-demand mismatches in the industry. Over the last two years of industry adjustment, some companies with capacities of tens of millions of kilometer cores have exited market competition, and several mid-sized manufacturers have either suspended or canceled preform expansion plans. This substantial clearance of low-efficiency capacity has laid the foundation for supply-demand dynamics in the new prosperity cycle.

Global AI Data Center Construction Drives Demand Surge

The report states that current fiber demand is structurally growing, driven by both domestic and overseas markets. Domestically, the “AI+” national strategy is pushing AI data centers into a large-scale construction phase; meanwhile, overseas markets, led by North America, are also experiencing a boom in hyperscale AI data center construction, with operators accelerating the layout of “AI factories,” jointly tightening global fiber supply.

Of note, the structure of the North American market has undergone a historic shift, with data center market size surpassing the traditional telecom market for the first time. According to Mike O’Day, head of Corning’s fiber business, meeting surging demand is now the industry’s top challenge—Meta’s data center project in Louisiana alone requires about 8 million miles of fiber.

Since 2025, data center construction has continuously been reshaping fiber demand structures. On one hand, rapid expansion of AI training clusters requires high-density fiber interconnects within data centers.

On the other hand, the clustered development of hyperscale data center campuses is creating a new round of data center interconnection (DCI) demand. These application scenarios demand higher fiber performance, including low-loss designs, more advanced bend-insensitive fibers (such as G.657.A1/A2), and cables with ultra-high fiber counts, making data center-related demands the core driving force for technological upgrades and scale growth in the fiber optic cable industry.

Supply Balance Challenges between AI and Telecom Markets

As data center operators continue to optimize network speed, latency, throughput, and energy efficiency, demand for high-performance fiber cables for internal links, data center interconnects, and backbone network upgrades is surging, at a pace significantly exceeding the traditional telecom market. New applications led by AI are fundamentally reshaping the supply-demand dynamics and ecosystem of the conventional telecom industry.

In the domestic market, this trend has dual impacts: on one hand, the large-scale construction of AI data centers is generating strong demand for fiber resources, which may objectively squeeze demand in the traditional telecom market; on the other hand, the three major domestic telecom operators are still maintaining stable annual procurement volumes of tens of millions of kilometer-cores, with China Mobile’s demand reaching the billion kilometer-core level, providing basic business support for leading domestic fiber enterprises like YOFC, Hengtong Optic-Electric, FiberHome, and Zhongtian Technology.

In this context, manufacturers actively engaged in technological innovation and business expansion around data centers and AI demands are expected to improve capacity utilization and optimize unit costs by expanding customer coverage and supply scale. With superior product performance and comprehensive service capabilities, these companies will further strengthen their existing advantages in the telecom market and achieve coordinated growth across cycles and sectors.

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