China Galaxy Securities has released a research report commenting on the recently announced bidding results for China Mobile's 2026-2027 special optical cable centralized procurement project. The report notes that of the eight winning manufacturers, seven submitted bids at the maximum price ceiling. This project involves the procurement of special optical cable products, including five main types: special demand standard (fiber bundle) optical cables (comprising submarine cables, rodent-proof cables, flame-retardant direct-burial cables, all-dielectric cables, and all-dielectric self-supporting cables), special demand ribbon (fiber ribbon) optical cables (including flame-retardant non-skeleton ribbon cables), blown micro cables, optical-electrical composite cables, and figure-8 self-supporting cables. The total procurement volume is approximately 79,400 sheath kilometers, equivalent to 3.131 million fiber kilometers. The project set a maximum bid price ceiling of 251.2471 million yuan (tax excluded). The bidding results indicate that with the exception of the top-ranked winner, the other seven manufacturers all bid at the maximum ceiling price, reaffirming a significant upward trend in optical fiber and cable prices.
The primary views of China Galaxy Securities are as follows:
The bidding results for China Mobile's 2026-2027 special optical cable centralized procurement project have been released. The fact that seven out of eight winning manufacturers bid at the price ceiling highlights that tender price caps are reaching new highs, driven by emerging demand factors. On the demand side, the core drivers of the optical fiber industry have undergone a fundamental shift. Previously, industry growth was primarily reliant on 5G base station construction and large-scale FTTH deployments, essentially addressing the basic need for "connectivity availability," with major telecom operators leveraging their strong bargaining power to dominate the centralized procurement market. However, since 2025, global AI competition has spurred the construction of ultra-large intelligent computing clusters. The demand for high-bandwidth, low-loss optical fibers for data center interconnects has surged, pushing the industry from an "operator infrastructure-driven" model to an "AI computing power-driven" one.
Simultaneously, fiber-optic drones have achieved scaled deployment in specific complex electromagnetic environments. Leveraging their advantages of anti-electromagnetic interference and high bandwidth, these drones transmit high-definition real-time images back to the control terminal for remote precision operations. These drones utilize G.657A2 specialty fibers, with a single drone consuming 20-50 kilometers of fiber, which is treated as a disposable consumable, creating structural demand pull in the specialty fiber market. Furthermore, emerging applications such as Industrial Internet and vehicular fiber optics are opening up additional, diversified, and high-end demand growth spaces.
On the supply side, the core driver of the current price increase is a production bottleneck for fiber preforms. Preforms account for approximately 70% of the industry chain's profits, feature high technical barriers, and have a long expansion cycle of 18-24 months. Limited expansion following previous price wars and industry consolidation has resulted in supply struggling to keep pace with demand growth. Current global preform capacity is nearing full utilization. Under these capacity constraints, manufacturers are prioritizing preform resources for higher value-added specialty fibers like G.657.A2 (for drones) and G.654.E (for AI data centers), which squeezes production capacity for standard G.652.D fibers and exacerbates structural shortages. Overseas markets face similar challenges, with giants like Corning and Fujikura also constrained by long expansion cycles, making it difficult to alleviate the short-term supply gap.
In summary, prices for various types of optical fibers and cables are likely to see further increases in the near future. The profits generated by these price hikes are also expected to fund research and development into cutting-edge technologies like hollow-core fiber, potentially creating a virtuous cycle. Risks include potential delays in capacity expansion and changes in the international situation.
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