Fiber Optic Quotes Skyrocket 150%! Optical Communications Entire Industry Chain Faces Valuation Restructuring Opportunity

On March 10th, A-shares related to fiber optics surged, with component stocks Changguang Huaxin (688048.SH), China Electric Xinlong (002298.SZ), Yangtze Communication (600345.SH), FiberHome Technologies (600498.SH), Long Fiber Optical (06869.HK), and FiberHome Technologies (002281.SZ) hitting the daily limit.

In terms of news, driven by demand from data centers and drones, the spot price of G.652.D fiber exceeded 50 yuan, a 150% increase since New Year’s Day. High-end specialty fibers like G.657.A2 and G.654.E saw even more significant gains.

Industrial Securities pointed out that the valuation system for optical communication companies is expected to shift from “cyclical manufacturing” to “core growth.” Currently, it is a golden window for deploying core assets in AI computing infrastructure, and the long-term opportunities across the entire industry chain remain promising.

Supply and demand imbalance drives price increases

Looking back over the past three years, the fiber optic industry faced long-term overcapacity and low prices. G.652.D fiber prices once hovered below 20 yuan, putting pressure on company profits and keeping sector valuations low. However, since early 2026, this pattern has been completely broken, with fiber prices entering a continuous surge. From around 20 yuan before New Year’s, prices have climbed to over 50 yuan, a 150% increase in just over two months, reaching the highest levels in nearly seven years.

More notably, high-end specialty fibers performed even better. Models like G.657.A2 and G.654.E saw prices rise far beyond those of regular fibers. For example, G.657.A2 prices increased from 35 yuan per kilometer to 210–230 yuan per kilometer, a nearly 557% jump, making it a key highlight of this price surge.

The surge is primarily driven by increased demand from data centers and drones. The advent of AI computing power has triggered a boom in data center construction, and fiber, as the core transmission medium within data centers and clusters, is experiencing exponential growth in demand. Compared to traditional data centers, AI clusters require 8 to 10 times more fiber per unit. G.657.A2, with its bend-insensitive properties, is widely used in internal data center cables like butterfly cables and patch cords, and is now one of the fastest-growing models, with supply already tight.

On the supply side, rigid constraints further exacerbate supply-demand mismatches, supporting price increases. The core bottleneck in the fiber industry chain is the preform rod, which has a long expansion cycle of 1.5 to 2 years, involves large investments, and has high technical barriers. Since 2019, the industry has been in a downturn, with cautious capital expenditure and no large-scale capacity additions. Some small and medium-sized manufacturers even exited during the downturn, leading to effective cleanup of inefficient capacity. Additionally, converting fiber preform production processes can reduce capacity and yield, restricting the release of high-value-added specialty fibers and creating a significant supply gap for high-end fibers.

Shenyin & Wanguo Securities noted that the current fiber price increase is not seasonal or routine cyclical adjustment but driven by a combination of demand explosion and supply rigidity, resulting in a “volume and price rise” trend.

Which companies are worth watching?

Beyond the short-term price rally and sector uplift, this industry transformation signifies a fundamental reshaping of the valuation system for optical communication companies.

Industrial Securities’ latest research report clearly states that the valuation system for optical communication firms is expected to shift from “cyclical manufacturing” to “core growth,” a view widely accepted by the market. For a long time, the industry has been viewed as a cyclical manufacturing sector, with valuations constrained by capacity and price cycles. However, the current demand explosion driven by emerging fields like AI computing represents long-term growth needs, which will fundamentally change the industry’s growth logic.

Further analysis by Industrial Securities indicates that building AI computing infrastructure is a long-term mainline. As the “highway” of AI industry chain, optical communication is an indispensable core link with sustained and growing demand. As AI technology evolves, computing power demand will continue to explode, driving ongoing upgrades in the optical industry chain. The profitability and growth potential of optical communication companies will significantly improve, shifting away from traditional “cyclical profit” models toward long-term core assets. Consequently, market valuation logic will transition from “cyclical valuation” to “growth valuation,” with further expansion potential.

From the industry development perspective, the long-term opportunities across the entire optical communication industry chain are clear. It remains a prime window for deploying core assets in AI infrastructure. Based on industry chain layout, three main focus areas are recommended:

1. Leading fiber optic cable manufacturers with full industry chain coverage, including fiber preform, fiber, and cable. These companies have high preform self-sufficiency and cost advantages, directly benefiting from the “volume and price rise” driven by fiber prices. Key targets include Long Fiber Optical, Hengtong Optoelectronics, and Zhongtian Technology. Among them, Long Fiber Optical, as a global leader, uniquely masters PCVD, VAD, and OVD preform technologies with industrialization, nearly 100% preform self-sufficiency, and has secured over $1 billion in subcontracted orders from Corning, with significant profit elasticity.

2. High-end specialty fiber companies. As demand from data centers, drones, and “East Data West Computation” surges, demand for high-end fibers like G.657.A2 and G.654.E will continue to grow. Companies with technological barriers will have advantages. G.654.E, as an ultra-low-loss fiber, is a key component of backbone networks for “East Data West Computation,” suitable for long-distance transmission and commanding higher prices. Demand is rapidly increasing. Companies like Tongding Interconnection and FiberHome have deep technical reserves in hollow-core and ultra-low-loss fibers and are expected to benefit continuously.

3. Core upstream and downstream companies in the optical communication industry chain, including optical modules, chips, and components. As fiber demand explodes, the entire industry chain will develop synergistically. Nvidia recently announced a $4 billion investment in two leading optical communication companies, Lumentum and Coherent, focusing on silicon photonics and CPO technologies, promoting technological upgrades. This creates opportunities for A-share companies such as InnoLight, New Easight, Tenda Communication, Yuanda Technology, and others, to accelerate growth.