The White House 200 billion order supports Tengxiang cable expansion faced challenges, CEO bluntly said "it is impossible to satisfy all customers".

Notice that the stock of Japanese cable manufacturer Fujikura has soared by about 1400% in the past two years, as global new data centers have generated huge demand for its cables that it cannot meet. Currently, the only issue is that the company's production capacity cannot keep up with the demand. CEO Naoki Okada said in an interview this week that further capital expenditure will be "necessary" to meet the demand related to artificial intelligence, and the company is discussing a new round of investments. He said the new investment plan may be announced in the mid-term plan to be released in May. The shortage of fiber optic cables highlights potential risks for investors in AI-related companies, especially for Fujikura, which has recorded one of the strongest increases in global tech stocks in the past two years. On Thursday, due to news that Blue Owl Capital would not invest in Oracle's data center, concerns about the prospects of AI caused Fujikura's stock price to fall 3.4% in the Tokyo market, to 15,960 Japanese yen. "Fujikura remains our favorite Japanese cable manufacturer as it is involved in capital expenditure for mega-scale cloud computing giants and high-profit telecom products. Although we have reduced some positions due to overheating stock prices in the third quarter, "said Richard Aston, portfolio manager at Chikara Investments LLP. Fujikura's stock price has outperformed tech giants like NVIDIA. He manages the CC Japan Income & Growth Trust Fund, and as of the end of November, Fujikura was one of its top ten holdings. Aston pointed out, "Supply capacity is a potential risk confirmed by the company, but in the current market conditions with strong demand expectations, their pricing power will help them manage production plans." Fujikura was founded in 1885. At the time of promoting new investment, the company is working to meet the demands of the U.S. market. In October of this year, the White House selected Fujikura to provide fiber optic cables worth up to $20 billion for its AI infrastructure. Before any negotiations on U.S. investments, Fujikura had announced plans to invest 45 billion yen (about $2.89 billion) to build a new factory. "It is obvious that if we build these generative AI infrastructures, our current capacity will not be able to meet the demand," Naoki Okada said. He added that the company is not yet clear on the specific timetable for investments, but even if spread over 10 years, it is still a huge amount. The CEO said that with further investment plans being discussed, Fujikura has secured fiber optic supply agreements from several global companies and aims to increase the productivity of existing factories to bridge the manufacturing gap before the new capacity goes online. The 61-year-old executive once personally bonded fiber optic bundles at his desk nearly 20 years ago, assisting in the development of Fujikura's "spider-web-like fiber optic belt" used in data centers today. Okada said the company now collaborates with almost all mega-scale cloud computing giants. "I never imagined it would develop to this point," he also said, as demand for AI-driven data centers is growing rapidly, the company "simply cannot meet the needs of all customers." Data shows that Fujikura's customers include Apple and Toyota. Morgan Stanley Mitsubishi UFJ Securities analyst Yu Shirakawa stated in a report in December that he still expects Fujikura to maintain strong growth through optimizing product portfolio and connector sales. The institution then raised Fujikura's target price from 14,000 yen to 21,500 yen. Last month, Fujikura raised its full-year revenue forecast to 179 billion yen, an increase of 26% from previous expectations. As about 75% of its sales come from overseas, a weaker yen could bring further upside potential for its profits.