Core Viewpoint - The demand for optical fibers and cables is being profoundly reshaped by AI, leading the industry into a new supply-demand cycle, with a potential supply shortage expected in the next two years [1] Group 1: AI Impact on Demand - AI is projected to account for 35% of the downstream demand for optical fibers and cables by 2027 [1] - The growth in AI is driving the construction of data centers, which has previously received limited attention due to the high proportion of traditional telecom demand [1] - The demand for optical fibers and cables is expected to rise from less than 5% in 2024 to 35% by 2027, resulting in a global fiber demand of 880 million core kilometers by 2027 [1] Group 2: Supply Dynamics - The global supply of optical fiber rods is currently around 25,000 tons, with a cautious expansion attitude from existing manufacturers [2] - The production capacity of optical fiber rods is expected to grow to approximately 26,000 tons by 2027, with annual supply capacity for optical fibers reaching about 850 million core kilometers, which may fall short of annual demand [2] Group 3: Market Concerns - Supply shortages are anticipated to first occur in North America, where AI demand is highest, while Chinese manufacturers have limited exposure [3] - Domestic operators may not benefit from price elasticity in the short term due to the centralized procurement mechanism [3] - The revenue share of domestic operators for leading companies has decreased to below 40%, with potential profit elasticity expected to be realized after the next procurement cycle [3]

Core Viewpoint - The AI is profoundly reshaping the demand for optical fibers and cables, pushing the industry supply-demand relationship into a new cycle, with a potential supply shortage expected in the next two years [2][34]. Supply and Demand Dynamics - The tightening supply has already led to price increases, with G.652.D fiber prices rising over 20% since early 2025, driven by AI demand for various fiber types that are occupying production capacity [2][6]. - Global demand and capacity have regional mobility, meaning that as overseas manufacturers supply North America, non-North American markets will also face supply shortages, with leading domestic companies having an export ratio of 30-50% [2][34]. - The global optical fiber demand is projected to reach 880 million core kilometers by 2027, with AI expected to account for 35% of the downstream demand for optical fibers and cables [4][34]. Market Trends - The optical fiber market is expected to stabilize and recover, driven by the demand from data centers and DCI (Data Center Interconnect) applications, with the market for AI-driven optical fibers projected to reach $2.1 billion by 2027, growing at a CAGR of approximately 73% from 2024 to 2027 [12][34]. - The supply side is characterized by a cautious expansion attitude among manufacturers, with current global optical fiber production capacity estimated at around 850 million core kilometers, which may fall short of annual demand [35][36]. Emerging Fiber Types - New types of optical fibers, such as G.654.E and hollow-core fibers, are expected to see rapid growth due to their advantages in low latency and long-distance transmission, making them suitable for DCI applications [20][29]. - Specialty fibers are gaining traction as AI-driven computing clusters expand, with manufacturers accelerating research and development in this area to meet the increasing demand for high-performance communication [22][31]. Competitive Landscape - Leading companies with stable production capacity and advanced technology are expected to benefit first from the rising demand in the data center sector, as the supply landscape remains relatively stable in the short term [36][37]. - The market for specialty optical fibers is more concentrated than that for standard telecommunications fibers, allowing leading manufacturers to capture a larger share of the value [34][36].