The market experienced narrow-range fluctuations with lower trading volume today (April 7), yet the rotation among leading stocks in primary sectors was notably pronounced. In the optical communication and fiber optic sector, first-tier leaders like Yangtze Optical Fibre and Cable Joint Stock Limited Company and Hengtong Optic-Electric Co., Ltd. continued their upward momentum, while a batch of mid-to-low priced stocks such as Sichuan Huiyuan Optical Communications Co.,Ltd., Tongding Interconnection Co., Ltd., and Huamai Technology Co., Ltd. also surged to their daily limit-up. Opportunities within the optical communication and fiber optic sector are broadening further down the value chain.
In the secondary market for optical communication and fiber optics, Yangtze Optical Fibre and Cable hit new highs again, accompanied by significant gains for mid and low-priced stocks. Today's market performance was more stable than anticipated. Major indices opened slightly higher, experienced some divergence, but showed signs of a rebound from intraday lows, closing with lower shadows—indicating clear capital allocation activity. However, trading volume shrank further (dropping to 1.6 trillion yuan), as the market awaits more definitive signals regarding a potential shift in Middle East tensions.
An investment adage suggests that time smooths out volatility but also magnifies rewards. The underlying message is that long-term investing can mitigate the impact of short-term uncertainties and, when the direction is correct, yield substantial returns. Recently, investors who maintained positions in the promising optical communication and fiber optic sector have likely significantly outperformed the broader market. Amid market sentiment recovery, hard technology sectors often present opportunities and become focal points for capital inflows, as seen today with a widespread rally in optical communication and fiber optic concept stocks. For instance, Sichuan Huiyuan Optical Communications Co.,Ltd. (three consecutive limit-ups), Shandong Xinneng Taishan Power Generation Co.,Ltd. (three consecutive limit-ups), Tongding Interconnection Co., Ltd., Huamai Technology Co., Ltd., Donghai Quartz Products Co., Ltd. (which hit an intraday limit-up), TGC Industrial Products Co., Ltd., and Zhongtian Technology Group Co., Ltd. all experienced strong upward movements. Currently, the fiber optic secondary market is characterized by leading stocks driving gains—exemplified by ten-baggers like Yangtze Optical Fibre and Cable—and accelerated rotation among mid and low-priced leaders, indicating a broadening of individual stock opportunities.
Over a longer timeframe, the fiber optic index has demonstrated robust growth, outperforming the broader market. Since establishing a low point in late November last year, the fiber optic index has surged by over 130%. Over the past month, within the Wind fiber optic component stocks, Yangtze Optical Fibre and Cable and Sichuan Huiyuan Optical Communications Co.,Ltd. have been standout performers.
Regarding investment opportunities in fiber optics, analysis highlighted an upward cyclical inflection point as early as last December, noting that both prices and capacity utilization rates were confirming this trend. Demand from AI is crowding out traditional fiber optic capacity, leading to rising prices for bulk fiber. As the supply-demand gap widens further, price increases are expected to spread. AI data centers consume roughly ten times more fiber than traditional data centers. Coupled with growing Data Center Interconnect (DCI) orders, a multi-billion-yuan incremental market has emerged. Furthermore, key players in optical communication and fiber optics, such as Yangtze Optical Fibre and Cable and Hengtong Optic-Electric Co., Ltd., were identified much earlier. Both stocks subsequently entered significant upward trends. Similarly, Yuanjie Semiconductor Co., Ltd., another stock that achieved a ten-fold increase, was included in research analysis as early as June 18, 2025.
The sustained and broadening rally in the fiber optic sector, a core transmission medium for optical communication systems, is driven by multiple positive factors including industry trends, price increases, and technological advancements. The expanding supply-demand gap for fiber, fueled by demand from AI data centers, stands out as a primary driver recently. Specifically, fiber optic price hikes continue. Latest data shows that as of April 6, 2026, the price of G652.D fiber in the Chinese market has surged over 400% from its low last year. This price increase is underpinned by a growing supply-demand gap. On one hand, demand is exploding, particularly from AI computing power, as global cloud providers increase capital expenditure, fueling a surge in fiber demand for AI data center construction. On the other hand, supply faces capacity bottlenecks, exemplified by the 18-24 month lead time for expanding fiber preform production. According to CRU estimates, global fiber demand will reach 577 million core kilometers in 2026, while effective supply is only 397 million core kilometers, resulting in a deficit of 180 million core kilometers and a gap rate exceeding 16%.
Demand driven by technological iteration is also continuously increasing, enhancing growth opportunities for fiber optics. Fiber optic cables can be categorized into types like solid-core fiber, multi-core fiber, specialty fiber, and hollow-core fiber. Currently, the commercialization of hollow-core fiber is accelerating, and breakthroughs in multi-core fiber multiplexing technology are further boosting sector sentiment.
The fiber optic industry chain, centered on optical signal transmission, encompasses upstream raw materials, midstream manufacturing and integration, and downstream application markets. The upstream segment involves core materials and equipment, such as fiber preforms, which represent a high-technology barrier and account for approximately 70% of costs. Representative companies include Yangtze Optical Fibre and Cable and Hengtong Optic-Electric Co., Ltd. in China. Optical materials include high-purity quartz sand (represented by companies like Donghai Quartz Products Co., Ltd., which hit a 10% limit-up during trading on April 7) and fiber coatings. The midstream segment involves the manufacturing of optical fibers and cables, represented by companies like Yangtze Optical Fibre and Cable, Hengtong Optic-Electric Co., Ltd., Zhongtian Technology Group Co., Ltd., and FiberHome Telecommunication Technologies Co., Ltd. Downstream applications are diverse, including emerging markets like data centers, where AI computing power is driving sustained growth in demand for ultra-low loss fibers and hollow-core fibers, further heating up the industry.
Leading securities firms express optimism regarding future investment opportunities in fiber optics. For example, China Securities Co., Ltd. noted that since the third quarter of 2025, fiber prices in the Chinese market have been rising continuously, reflecting strong demand and generally tight supply. Robust overseas demand and strong export performance also indicate vibrant global demand for fiber optic cables. The significant increase in China's fiber optic export ratio corroborates the industry's high景气度 (prosperity). In February this year, China exported 3,779.9 tons of optical fiber, valued at 790 million yuan, representing year-on-year increases of 63.6% in volume and 126.8% in value. This export volume is 17.6 times higher than the 203.5 tons exported in February 2018, a previous peak for domestic demand.
China Securities Co., Ltd. forecasts that AI-driven fiber demand will maintain strong growth. Firstly, global demand for optical modules is expected to increase significantly in 2026, correspondingly driving fiber demand. Secondly, demand for Scale-up (vertical scaling) related fiber is anticipated to gain momentum around 2027. Thirdly, DCI will also generate substantial demand. Currently, the fiber optic cable industry has transitioned from recovery to a phase characterized by "tight supply alongside rising volumes and prices." As a capital-intensive industry, adding significant new capacity in the short term is challenging, suggesting prices are likely to continue rising. The fiber optic cable sector remains highly recommended.
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