Guosheng Securities: Ordinary optical cable business recovers at the bottom, special optical fiber opens up room for long-term growth

The Zhitong Finance App learned that Guosheng Securities released a research report saying that the general optical cable business is recovering at the bottom, providing a solid margin of safety and profit repair flexibility; the specialty optical fiber business ushered in explosive growth under the wave of AI computing power, opening up room for long-term growth. The bank believes that leading companies in the industry with a perfect layout of the entire optical fiber optic cable industry chain and are in a leading position in the R&D and industrialization of special optical fibers such as air core optical fiber will fully benefit from stabilizing AI recovery and the explosion of data demand caused by general cables.

Guosheng Securities's main views are as follows:

Catalytic events

After experiencing a cyclical bottoming out of the traditional fiber optic cable market for about 4 years, the loose fiber market has now shown a clear sign of recovery; at the same time, the overseas specialty optical fiber market has entered a golden track of high growth under the two-wheel drive of AI computing power breakthroughs and the explosion of application scenarios.

The general optical cable industry is at its bottom. Will it be driven by a recovery in demand and stable prices

The bottom of the ordinary optical cable market confirmed that it has now shown significant signs of rebalancing supply and demand and recovering. In the first half of 2025, China's optical cable production was 125.323 million core kilometers. Although there is still a year-on-year decline, the decline has narrowed sharply compared to the previous period, showing a steady trend. According to media sources, leading optical fiber manufacturers have reported that the price of cable loose fiber has increased by about 15%. The volume and price indicators are showing a positive signal. Carrier collection prices are expected to rise steadily, and the industry's profit margin is gradually being restored. At the same time, a new demand engine was launched, and intelligent computing centers driven by artificial intelligence grew, creating strong demand for optical cables within data centers and interconnect (DCI), driving the industry to “return to the growth cycle” from a trough.

Looking at both the supply and demand sides, after experiencing a period of 5G production capacity expansion, the overall domestic supply has stabilized, while the short-term slowdown in demand has led to a decline in prices. Traffic has continued to rise in recent years, driving a steady recovery in demand, and is expected to gradually cross the critical point of supply and demand. The bank believes that this round of domestic fiber optic cable market is different from the demand explosion brought about by China Mobile's FTTH construction in 2018-2019, but is based on a moderate recovery with stable supply and demand.

Special optical fiber technology drives the explosion of superposition scenarios, showing a trend of “leaps and bounds”

In addition to general fiber, demand for specialty optical fibers has exploded and is growing even more. AI computing power clusters require lower latency, higher bandwidth, and higher density for data transmission. Special optical fibers have ushered in new development opportunities and accelerated maturity and penetration. Air-core optical fiber has great potential for low latency and high-speed transmission over short distances. With breakthroughs in mass production technology and accelerated commercial implementation, penetration rate is expected to gradually increase; as a core component for long-range, high-precision optical amplification, demand for doping optical fiber will grow simultaneously as the geographical scope of computing power networks expands. Domestic leaders have reached the international advanced level in cutting-edge fields such as air-core optical fiber and multi-core optical fiber, and are expected to usher in new market entry opportunities under rapid response demand.

Valuation is low, and the cost performance ratio of leading configurations is prominent

Influenced by the configuration style, the fiber-optic cable sector, which is undervalued, is receiving increased attention. Externally, Corning and Fujikura stock prices have repeatedly reached new highs. Among them, the leading pattern of fiber optic cables is clear, revenue and profit are stable, and performance visibility is strong. At the same time, the industry's recovery trend is clearly compounded by the explosion in demand for high-end products, and the allocation value is prominent.

Risk warning: AIDC construction falls short of expectations; geopolitical risks; macroeconomic environment falls short of expectations.