CITIC Securities: Continually Optimistic About Investment Opportunities in the Optical Fiber and Cable Industry

CITIC Securities Research Report states that since Q3 2025, the price of optical fibers in the Chinese market has continued to rise, reflecting improved demand and overall tight supply. Overseas demand is strong, and export performance is robust, reflecting the strong demand in the global optical fiber and cable market. CITIC Securities expects that the demand for optical fibers driven by AI will continue to grow rapidly. First, the global demand for optical modules is expected to increase significantly in 2026, which will correspondingly boost the demand for optical fibers; second, it is anticipated that the scale-up demand for optical fibers may begin to materialize in 2027; third, DCI will also bring significant demand. Currently, the optical fiber and cable industry has shifted from recovery to a stage of “tight supply and rising quantity and price.” As a capital-intensive industry, CITIC Securities expects that new capacity will be difficult to add in the short term, so prices are likely to continue rising, and the optical fiber and cable sector is continuously recommended.

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CITIC Securities: Continuing to be optimistic about investment opportunities in the optical fiber and cable industry

The optical fiber industry is entering a boom cycle.

Since Q3 2025, the price of optical fibers in the Chinese market has continued to rise, reflecting improved demand and overall tight supply. Overseas demand is strong, and export performance is robust, reflecting the strong demand in the global optical fiber and cable market. We expect that the demand for optical fibers driven by AI will continue to grow rapidly. First, the global demand for optical modules is expected to increase significantly in 2026, which will correspondingly boost the demand for optical fibers (mainly for scale-out); second, it is anticipated that the scale-up demand for optical fibers may begin to materialize around 2027; third, Scale Across will also bring significant demand. Currently, the optical fiber and cable industry has shifted from recovery to a stage of “tight supply and rising quantity and price.” As a capital-intensive industry, we expect that new capacity will be difficult to add in the short term, so prices are likely to continue rising, and the optical fiber and cable sector is continuously recommended.

1. CRU data shows that since Q3 2025, the price of domestic G652D optical fibers has consistently increased month-on-month, reaching 31.5 yuan/km by January 2026, which is a 79% increase compared to November 2025, reflecting improved industry demand and overall tight supply. In 2025, China’s optical fiber rod export volume increased by 89.5% year-on-year, with a value increase of 81.7%; the export volume of optical fibers increased by 47.1% year-on-year, with a value increase of 65.4%. The strong export growth reflects the robust demand in the global optical fiber and cable market, with strong overseas AI demand on one hand and significant consumption of G657 optical fibers by applications like battlefield drones on the other.

2. We expect that the demand for optical fibers driven by AI and other factors will continue to grow rapidly. First, considering that the global demand for optical modules is expected to increase significantly in 2026, the corresponding demand for optical fibers will also grow (mainly for scale-out); second, it is anticipated that the scale-up demand for optical fibers may begin to materialize around 2027, with Corning projecting that the scale-up demand will be 2-3 times that of existing enterprise network business; third, Scale Across will also bring significant demand.

3. Hollow-core optical fibers have advantages such as low loss, low latency, low nonlinearity, and low dispersion. CSP manufacturers in North America and domestic operators are actively deploying hollow-core optical fibers.

4. The market is concerned about the supply and demand pattern of optical fibers and cables, worrying about rapid supply growth after price increases. We believe that: first, the manufacturers in the industry experienced the boom brought by FTTH from 2016 to 2018 and also felt the supply-demand imbalance after 2019, with the price halving causing pain; this time, manufacturers’ capacity expansion will be relatively rational, as the industry has been clearing since 2020, with few expansions; second, the capacity expansion cycle for optical rods takes at least a year (new entrants need even longer); third, products like G654E, G657, multimode, and hollow-core optical fibers have high technical requirements, which new entrants cannot quickly overcome.

5. We expect a supply gap for optical fibers in North America in 2026 and continue to be optimistic about the optical fiber and cable sector. We also recommend paying close attention to the breakthroughs of leading domestic optical fiber and cable manufacturers in North America.

Risk Warning: Optical fiber demand growth may be less than expected; optical fiber price increases may be less than expected; risks associated with rapid capacity expansion; risks from changes in anti-dumping policies, etc.

(Source: People’s Financial News)