The Behind the Global Surge in Domestic Optical Fiber Orders

Ask AI · Why does China’s optical fiber industry lead the global market?

(Writer / Sun Meixin Editor / Lü Dong) 

Nvidia and Corning's collaboration has once again made optical fiber a hot topic in the market. 

According to the announcement, Corning will build three advanced manufacturing plants in the United States to significantly expand the manufacturing scale of advanced optical connectivity solutions domestically. More notably, Nvidia announced it will invest 500 million USD to deeply participate in the construction of Corning's factories. This capacity expansion is expected to increase its optical connectivity manufacturing capacity in the U.S. by ten times, with fiber capacity increasing by over 50%, to meet the accelerated demand driven by AI factory construction. 

Corning is a leading company in the global optical fiber communication field and the largest fiber manufacturer in North America, holding core manufacturing processes and advanced technologies in fiber production. 

![](https://img-cdn.gateio.im/social/moments-871ae2a8b0-61d587f975-8b7abd-e5a980)Corning Inc.  

Just this January, Corning reached a 6 billion RMB data center fiber optic cable supply agreement with Meta, for Meta’s AI data center construction, attracting global attention in the optical communication industry. Less than half a year later, news of Nvidia’s involvement in building production lines quickly broke out, igniting the market. 

The surge in fiber optics popularity was not sudden; explosive growth in AI computing power has driven high demand for computing fiber. Since last year, global demand for optical fiber and cable has skyrocketed, with total annual shipments reaching 662 million core kilometers, a 15.3% increase year-on-year, significantly higher than the earlier forecast of 587 million core kilometers, and the market faces a huge gap. 

China is the world’s largest producer and consumer of optical fiber and cable, with a market size expected to surpass 60 billion USD, accounting for over 40% of the global total. Last year, shipments reached 372 million core kilometers, a 7.5% YoY increase, accounting for 56.3% of global shipments. 

This momentum continued this year. According to CCTV Finance, the price of specific models of fiber in some Jiangsu fiber producers’ markets increased by 650% YoY but still remained in high demand. Many leading fiber companies’ orders are booked into the first quarter of next year, showing extremely high market demand. 

This immediately caused fluctuations in the capital market, including continuous gains in domestic A-share AI infrastructure concept stocks, with companies like FiberHome Technologies, Longhua Fiber, Zhongtian Technology, and Hengtong Optoelectronics becoming hot concept stocks. 

Why did the fiber industry, once oversupplied, “recover”? Why can domestic fiber manufacturers continue to “explode orders”? Under the global competition for computing power, what advantages does China’s fiber industry have? Do the market value gains of fiber companies truly translate into profits? These questions have become key concerns as the industry “re-booms” again. 

**AI computing power fuels fiber demand** 

Why has the global demand for fiber products suddenly surged in recent years? 

The main reason is the explosive growth of AI computing power in recent years. Powerful AI requires massive GPU clusters, which need high-speed interconnection via fiber optics for efficient collaboration. When interconnection density and speed requirements reach a certain level, more compact and energy-efficient technologies like CPO (co-packaged optics) are needed to tightly integrate fiber and chips. 

Traditional electrical interconnection (copper cables) can no longer meet the extreme demands for bandwidth, power consumption, and transmission efficiency of large AI models. Optical communication technology, with its fast transmission, low energy consumption, and suitability for long-distance transmission, has become an indispensable part of global computing infrastructure under the accelerated pace of technological development. 

corning CEO Wendell Weeks stated that fiber could be introduced between chips, ultimately replacing thousands of copper cables inside rack systems (like Vera Rubin): “Moving photons require 5 to 20 times less energy than moving electrons.” Huang Renxun also mentioned that CPO is crucial for AI construction, and the next-generation AI infrastructure will need a large number of optical connections because computing demands are rapidly increasing, making copper lines insufficient. 

![](https://img-cdn.gateio.im/social/moments-a8a54d2449-33ac4d0970-8b7abd-e5a980)  

Gu Renta, a tenured professor at Beijing University of Posts and Telecommunications’ School of Information and Communication Engineering, explained in an interview with Science and Technology Daily that the underlying reason for this fiber demand explosion is the shift to high-speed optical interconnection within intelligent computing centers: “Efficient and flexible optical switching structures help alleviate the pressure caused by the surge in east-west traffic within these centers.” 

However, it should be noted that only specific types of fiber meet chip requirements. Currently, the main market standard is G.652.D fiber for broadband networks. The market gap is in multimode, multi-core fiber types with better transmission performance and bend tolerance. 

In other words, the fiber types with large market inventories do not meet the hardware needs of computing power. High-performance optical fibers needed for AI computing are produced by only a few companies with R&D and production capabilities, leading to a mismatch between demand and supply, and a market shortage that is rapidly intensifying. 

Meanwhile, due to the huge demand in the computing industry, limited capacity is used to produce higher-margin special fibers and data center optical fibers, causing tension in traditional fiber supply. 

All data show a global shortage of fiber products and rapid growth in demand in recent years. 

According to CRU, a UK commodity research institute, the proportion of AI fiber in global demand is expected to surge from 5% in 2024 to 30% in 2027. Guosen Securities reports that the global fiber supply-demand gap will be about 6% in 2026 and will further expand to 15% in 2027. 

The market shortage has also driven prices sharply higher. CRU statistics show that Chinese spot fiber prices have increased over 400% from their lows in May 2025. Overseas markets are similarly affected: in March, US prices reached $12.5 per core kilometer, up 68.9% from January; European prices in March were $10 per core kilometer, a 122.2% increase from January. 

It’s easy to see why major chip and computing companies like Meta and Nvidia are placing large pre-orders with Corning to “lock in” supply and secure factories. In the current fierce global AI race, leading companies need stable supply from top-tier technology suppliers to avoid hardware shortages and cost increases from soaring prices. 

**Multiple opportunities make China a major fiber manufacturing country**  

Driven by market demand and prices, global shipments have surged significantly, with China’s performance especially remarkable. 

Last year, China’s fiber shipments exceeded half of the world’s total. This year, export volumes of fiber optic cables in each month are equally impressive. According to China Customs, in March, China’s fiber optic cable exports reached $245 million, a 263.84% YoY increase, with an average export price of $76.11 per kilogram, up 204.32%. 

“China Business News” reported that, based on customs data for April, fiber exports reached 4,109 tons, a 52% MoM increase, setting a new record. 

In terms of shipments, China is truly the “world factory” for fiber manufacturing. Leading companies like Longhua Fiber earned 8B RMB outside the domestic market in 2025, a 46.66% YoY increase, accounting for 42.33% of total revenue; Hengtong Optoelectronics’ overseas revenue exceeded 14.7 billion RMB last year, up 29.85%, representing about 22% of total revenue. 

Among their clients are not only China’s top telecom operators, Alibaba, Tencent, Huawei Cloud, State Grid, but also global giants like Google, Microsoft, Amazon, and Nokia. 

It can be said that China’s fiber manufacturers’ production capacity provides an indispensable hardware guarantee for the development of global AI computing power. This is the result of nearly 50 years of development in China’s optical communication industry through multiple phases. 

China’s optical communication development started in sync with the world. After years of research, in 1982, the Wuhan Cross-River Communication Bridge marked the beginning of practical optical fiber communication. 

In the late 1980s, China established joint ventures with Japan, Europe, and other leading technology countries, introducing advanced international technology and equipment, laying the foundation for domestic industry development. For example, Longhua Fiber was established as a joint venture with Philips of the Netherlands, and Xigu Optical Communications was founded with Japan’s Furukawa Electric, both becoming leading domestic fiber companies and core regional fiber clusters. 

After the 21st century, under domestic policies supporting fiber industry expansion, several phases of industrial capacity increase occurred. 

Around 2000, large-scale telecom network construction drove fiber demand; by 2008, China Unicom proposed the “fiber into copper retreat” strategy; after the 2013 “Broadband China” initiative, fiber-to-the-home (FTTH) and the “East Data West Computing” demand greatly boosted fiber and cable development. 

With surging market demand, many fiber and cable companies emerged, covering R&D, manufacturing, installation, and export. The large domestic market provided space for various enterprises, forming a complete fiber and cable industry chain. 

During the development around 2015, large companies expanded, and capacity increased, while Western and Japanese fiber companies faced high costs. Seeing China’s complete industry chain, some foreign-invested companies formed joint ventures with Chinese firms, providing technology support and orders, strengthening the industry base. Some capable domestic companies also established fiber preform rod production bases through joint ventures, gradually extending into the most profitable upstream segments. 

Today, fiber preform rods remain the core profit point in fiber manufacturing, accounting for about 70% of the industry’s profit. Although producing preform rods involves high technical barriers, only a few top companies can produce them, but 70% of global preform rod and fiber capacity is concentrated in China. 

“Overseas sales of domestically produced fiber are a reflection of comprehensive strength,” said an expert. First, the technological barriers have been broken through. Chinese companies have mastered the three main fiber preform rod fabrication processes: plasma chemical vapor deposition (PCVD), outside vapor deposition (OVD), and vapor axial deposition (VAD), with advanced levels in frontier technologies like hollow-core fibers. Second, they enjoy significant cost and delivery advantages, with a complete domestic supply chain and faster response than Western companies. Additionally, stable supply networks through globalized local production have strengthened supply chain resilience amid complex international environments, which is also a key factor. 

**Rich domestic industry chain, Suzhou shines**  

Such a complete industry chain and manufacturing capacity must mention several key domestic industrial clusters—centered around Wuhan Optics Valley, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Western Triangle. 

The Yangtze River Delta cluster is particularly prominent, with 14 listed fiber optic cable companies in Jiangsu alone, 8 of which are headquartered in Suzhou, including Hengtong Optoelectronics, Yongding Co., Tongding Interconnection, Tanfeng Communication, Guangge Technology, and others. 

![](https://img-cdn.gateio.im/social/moments-94e6192582-fd10662419-8b7abd-e5a980)  

Most of these are midstream in the AI computing power industry chain, with Hengtong Optoelectronics as the regional core. The entire fiber communication industry covers the full chain from fiber preform rods to optical fibers, cables, optical devices, modules, and network integration. Industry insiders note that being in this cluster allows companies to quickly respond and reduce costs by accessing top global suppliers without leaving the city. 

This is driven by both leading enterprises and local government policies. Early on, Suzhou Wuzhong District’s fiber optic cable industry cluster was included in the “National Torch Program Optical Cable Industry Base,” and more recently, the photonics industry has been designated as the city’s “Number One Industry” strategic project, aiming to build a “trillion-yuan” photonics innovation cluster by 2035, becoming a core support for the global “chip-device-end” segmented industry. 

A rough data point: Nanjing Customs reports that in the first two months of this year, exports from Suzhou Wuzhong District, including cables and wires, totaled 860 million RMB, while data from Huajing Industry Research Institute shows China’s wire and cable exports in the same period reached about 8B USD (roughly 39.36 billion RMB). 

Just Suzhou alone accounts for over 2% of national exports, illustrating Suzhou and the entire Yangtze River Delta fiber industry cluster’s significant position in the global market. 

It can be said that if AI computing power development is like the brain’s rapid operation, then Suzhou’s fiber manufacturing capacity is an indispensable part of supporting the brain’s blood supply network. 

**Domestic fibers still need breakthroughs at the high end**  

The surge in demand and prices has benefited many leading domestic fiber companies. Recent full-year 2025 and Q1 results show significant growth in core business data for many firms. 

For example, Longhua Fiber’s revenue last year was 6.03B RMB, up 16.85%; in Q1, revenue was 8B RMB, up 27.7%. Hengtong Optoelectronics’ revenue last year was 5.75B RMB, up 11.45%; in Q1, 17.791 billion RMB, up 34.09%. Zhongtian Technology’s revenue last year was 52.5 billion RMB, up 9.24%; in Q1, 13.142 billion RMB, up 34.71%. 

The revenue growth has also driven stock prices and market capitalization. Longhua Fiber’s stock price rose from 31.84 RMB/share at the end of May last year to 397.23 RMB/share on May 8, an increase of over 1147%, with a market cap surpassing 328.8 billion RMB; Hengtong’s stock price was around 15 RMB/share in May last year, now reaching 77.27 RMB/share, over five times higher; Zhongtian’s stock price increased from 13 RMB/share a year ago to 40.9 RMB/share, more than tripling. 

The Wind Fiber Index showed the sector index was at 1056 points in May last year, soaring to 3899.55 points by early May this year. 

However, compared to the rapid growth in revenue and market cap, the profit margins of these top companies remain generally low. Except for Longhua Fiber, whose gross margin exceeds 30%, most have gross margins in the double digits, with net profits in single digits. 

Hengtong’s gross margin last year was 12.46%, net profit margin 4.26%; Zhongtian’s gross margin was 13.88%, net profit 5.59%; Yongding’s gross margin was 13.89%, net profit only 3.94%. 

By comparison, Corning’s fiscal year results announced in January show a GAAP sales of $15.63 billion in 2025, with a gross margin of 36% and operating margin of 14.6%. Even among domestic leading fiber companies, profit margins are still notably lower. 

The reason for these low margins is related to the large-scale development of broadband fiber. From 2019 to 2023, the fiber industry experienced a prolonged price war caused by supply-demand imbalance. 

During this period, driven by the “fiber-to-the-home” policy, demand and bulk procurement peaked. But after demand for broadband deployment plateaued, the three major operators’ demand sharply declined, while existing fiber manufacturers still had excess capacity and inertia, leading to demand collapse and oversupply, causing years of plummeting prices and market competition. 

This cycle’s impact persists today. On one hand, fierce price wars have led to capacity “clearing” among small and medium firms, many of which exited after losses, with limited R&D ability. When demand shifted from broadband to computing fiber, outdated capacity could not keep up, and new capacity—requiring 18 to 24 months of construction, equipment debugging, and mass production—lagged behind. Some firms, scarred by previous losses, are more cautious in investment, creating current capacity shortages. 

On the other hand, the previous boom in broadband fiber laid the foundation for a complete domestic fiber and cable industry chain, which is now a key factor in the global fiber manufacturing capacity in the AI era. 

These leading companies maintain low profit margins partly because their business structures are still influenced by past production inertia. 

Take Hengtong as an example: its optical communication products with a gross margin of 27.53% and marine energy and communication business with 33.68% gross margin last year had revenues of 14.25B RMB and 3.7B RMB, respectively, accounting for 8.39% and 8.58% of total revenue. The copper conductor business, with a gross margin of only 1.45%, generated 66.85B RMB, accounting for 30%. The smart grid segment, with revenue of 17.79B RMB, made up over 37% of total revenue, with a gross margin of only 13.02%. 

Zhongtian’s situation is similar: its largest revenue comes from power grid construction, followed by copper products, with 42.4% and 18.1% of total revenue, but gross margins are only 14.92% and 2.17%. The higher-margin fiber communication and network (22.58%) and marine series (23.83%) account for 14.04% and 12.09% of revenue, respectively, and are not dominant in overall income. 

In contrast, Longhua Fiber, with better gross margins, mainly produces optical transmission and interconnection components, and is the only company globally that masters all three main preform rod fabrication technologies (PCVD, OVD, VAD), achieving 100% self-sufficiency in preform rods—an industry profit center. 

This also points to the next challenge for China’s fiber industry: as a new cycle begins, how can companies and the industry seize opportunities for technological upgrades and structural adjustments, extending into higher-threshold, higher-margin segments? This will determine how far China’s fiber industry can go. As new capacity is gradually released over the next two years, prices may face correction pressures, and domestic companies must build long-term competitive advantages through high-tech premium products.