Guosheng: Ordinary optical cable business bottoming out, special optical fiber opens up long-term growth space.

Guosheng released a research report stating that the ordinary optical cable business has bottomed out, providing solid safety margins and profit recovery elasticity; the special optical fiber business is experiencing explosive growth under the trend of AI computing power, opening up long-term growth opportunities. The industry believes that the complete layout of the optical fiber cable industry chain, as well as industry-leading companies in the research and industrialization of special optical fibers such as hollow core optical fibers, will benefit greatly from the stabilization of ordinary cable companies due to the warming AI computing power and the explosion of data demand. Guosheng's main points are as follows: Catalytic Events After experiencing a cyclical bottoming out period of around 4 years, the traditional optical fiber cable market has shown clear signs of recovery in the loose tube market. Meanwhile, the overseas special optical fiber market is entering a high-growth golden track driven by the breakthrough in AI computing power and the explosion of application scenarios. Ordinary optical cable industry sees the bottom, demand recovery and price stabilization drive a turn for the better The bottom of the ordinary optical cable market has been confirmed, showing significant signs of supply-demand rebalancing and recovery. In the first half of 2025, China's optical cable production reached 12532.3 million core kilometers, still down compared to the previous year, but the decline has narrowed significantly, indicating a stabilization trend. According to media reports, major fiber optic manufacturers have raised prices of ordinary cables by about 15%, showing positive signs of quantity and price indicators, with the price increases likely to stabilize the profit space of the industry. At the same time, the launch of new demand engines, driven by artificial intelligence-driven smart centers, has generated strong demand for optical cables in data centers and data center interconnects (DCI), driving the industry out of the downturn and back into a growth cycle. Looking from both the supply and demand sides, after the expansion phase of 5G capacity, the overall supply in China has remained stable, while the short-term demand slowdown has led to price declines. Despite this, data traffic has continued to increase in recent years, driving demand steadily upwards, and is expected to gradually cross the supply-demand threshold. The industry believes that the current domestic optical fiber cable market is different from the demand explosion driven by China Mobile Limited's FTTH construction in 2018-2019, but is based on a mild recovery under stable supply and demand trends. Special optical fiber technology-driven scenario outbreaks show a "surging" momentum In addition to ordinary fibers, the demand explosion of special optical fibers is more growth-oriented. AI computing clusters require lower latency, higher bandwidth, and higher density for data transmission, providing new development opportunities for special optical fibers, accelerating maturity and penetration. Hollow core optical fibers have the potential for low latency and high bandwidth for short-distance high-speed transmission, and breakthroughs in mass production technology and commercialization are accelerating, with the penetration rate expected to gradually increase. As the core component of long-distance, high-precision optical amplification, doped fiber demand will grow in tandem with the expansion of computational power network geographies. Domestic leading companies have reached international advanced levels in fields such as hollow core optical fibers and multi-core optical fibers, and are expected to see new market entry opportunities in response to rapid demand. Low valuation, prominent head position configuration cost-effectiveness Due to the influence of the configuration style, the optical fiber and cable sector with low valuation has attracted increased attention. With companies like Corning and Tongkang seeing their stock prices repeatedly reach new highs, the clear pattern of leading companies in the optical fiber and cable sector, stable revenue and profits, and strong performance visibility, coupled with the noticeable industry recovery trend overlaying the explosion in demand for high-end varieties, the configuration value is highlighted. Risk warning: AI data center construction falls short of expectations; geopolitical risks; macroeconomic environment falls below expectations.