AI Computing Power Is Driving A Boom Cycle For Fiber Optic Cables Leading Companies Are Accelerating Production Expansion

AI computing power is driving a boom cycle for fiber optic cables

leading companies are accelerating production expansion

The fiber optic cable industry experienced explosive growth in the first half of this year. Wind data shows that as of July 28, among the 38 A-share listed companies in the optical communication sector, 24 had released their first-half earnings forecasts, with 18 companies expecting positive results (including projected increases and a turnaround from losses), accounting for over 70%. Currently, leading companies in the industry chain have begun intensive capacity expansion. Some analysts believe that as large-scale AI model training and large-scale GPU cluster collaborative operation become the norm in the industry, the fiber optic cable industry is entering a boom cycle driven by AI computing power.

The latest data from the National Bureau of Statistics shows that in the first half of the year, among industries related to internal interconnection of data centers, the profits of the fiber optic manufacturing and optical cable manufacturing industries increased by 410.4% and 39.8%, respectively.

From a performance perspective, leading companies have shown outstanding results. Yangtze Optical Fibre and Cable recently released its 2026 interim results, projecting net profit attributable to shareholders of the listed company to be approximately RMB 2.4 billion to RMB 3 billion, representing a year-on-year increase of 711% to 914%. Hengtong Optic-Electric projects net profit attributable to shareholders of the listed company to be RMB 3.016 billion to RMB 3.568 billion for the first half of 2026, representing a year-on-year increase of 86.94% to 121.20%. Zhongtian Technology projects net profit attributable to shareholders of the listed company to be RMB 2.352 billion to RMB 2.508 billion for the first half of 2026, representing a year-on-year increase of 50% to 60%.

Analysts believe that from the demand side, the growth of the optical fiber and cable market in the past mainly relied on the construction pace of telecom operators, such as fiber-to-the-home (FTTH) driving demand, resulting in a long-term oversupply. However, the explosive growth of AI has rewritten the demand logic.

"The characteristics of demand-side momentum shift and structural upgrading are obvious," Zhang Zhe, assistant researcher at the China Electronics and Information Industry Development Research Institute, told the *Economic Information Daily*. He noted that market growth driven by traditional telecom operators is slowing down, while high-density cabling and high-speed interconnection within AI data centers have become the fastest-growing areas for fiber optic demand.

Zhuang Dan, executive director and president of Yangtze Optical Fibre and Cable, told the *Economic Information Daily* that the industry's demand is shifting from "fiber to the home" to "fiber to GPUs," essentially reflecting a shift in the fiber optic industry's demand logic from broadband access for millions of households to serving AI computing infrastructure. This has not only brought vast market growth but also reshaped the competitive logic of the global optical communications industry.

"This round of high-end fiber optic boom cycle is expected to continue for the next two to three years. AI data center construction, cross-regional computing power connections, and backbone network upgrades will continue to release demand, and AI-related fiber optic cables will become an important source of global market demand growth," An Yun, director of the Artificial Intelligence Research Institute of Saizhi Industry Research Institute, told the *Economic Information Daily*. He added that the subsequent industry boom will still be affected by factors such as cloud service provider capital expenditures, operator network investment, and the pace of new capacity release.

From the supply side, the bottleneck in optical fiber preform production capacity constitutes the core constraint. Zhang Zhe stated that preforms are a crucial link in the industrial chain, accounting for approximately 70% of industry profits. Their expansion cycle typically requires 12 to 18 months, involving high technological barriers and large-scale investment.

To match the rapidly growing market demand in the AI ​​era, several companies have launched expansion plans for optical fiber preforms and optical fibers. For example, Hengtong Optic-Electric plans to increase its optical fiber preform production capacity at its Inner Mongolia base by 1.5 times based on the first phase, with production expected to commence between the end of 2026 and the first quarter of 2027. Fiberhome Communications is accelerating the construction of its intelligent manufacturing base for the special optical fiber industry, focusing on expanding PCVD optical fiber preform manufacturing equipment and supporting capacity. Hangzhou Electric recently disclosed its 2026 plan to issue A-shares to specific targets, proposing to raise no more than 2.88 billion yuan, which, after deducting relevant issuance expenses, will be used to invest in projects such as the "Super Factory Construction Project for R&D and Manufacturing of Optical Fiber Preforms, Quartz Mother Materials, and New Optical Fibers."

In addition to the surge in demand, AI also places higher demands on the specifications of optical fibers. Zhuang Dan revealed that companies are proactively developing next-generation optical interconnect technologies to complete their technology and production capacity reserves. For example, regarding hollow-core optical fiber, hailed as a disruptive technology for next-generation optical communication, Yangtze Optical Fibre and Cable (YOFC) has already achieved complete self-development, mass production, and delivery capabilities for key raw materials.

Zhang Zhe believes that, overall, this round of high-growth cycle is expected to be highly sustainable, and suggests paying attention to the supply-demand matching rhythm. In the short term, the constraints on optical fiber preform capacity are unlikely to ease, and some industry insiders believe that the shortage will continue until the first half of 2027. In the medium term, it is necessary to closely monitor the industry's capacity expansion trends. Most of the newly built capacity is expected to form effective supply in the second half of 2027 or later. This release rhythm will be a key variable affecting changes in the supply-demand pattern and needs continuous monitoring.

"Currently, leading global companies occupy the majority of the optical fiber and cable market share, and manufacturers with full-chain manufacturing capabilities for preforms, fibers, and cables will benefit more," said An Yun. In the high-end optical fiber field, my country has formed a complete industrial chain covering optical fiber preforms, optical fibers, and optical cables, and leading companies are accelerating their extension to next-generation products such as hollow-core optical fiber. In addition, my country's high-end optical fiber and high-speed optical module complete machines are basically capable of supporting the current industrial upgrading, but the upstream core components and large-scale manufacturing capabilities still need to be improved in the future.