Rating: The supply and demand of fiber optics continues to be tight, and prices are expected to further rise.

As of early March 2026, there has been an explosive increase in the price of optical fibers. The optical fiber bulk purchase by China Telecom in January was cancelled due to low prices, and when it was restarted in February, the purchase price increased by about 50%. First Financial's "One Rating" believes that with the demand from drones and AI data centers, combined with limited expansion of optical rod production and a shortage of germanium materials, the supply-demand pattern in the optical fiber industry will remain tight in 2026, leading to further price increases in optical fibers. "One Rating" points out that there are three main driving factors behind the significant price increase of optical fibers: first, geopolitical conflicts have catalyzed a sudden increase in demand for G.657.A optical fibers for drones; second, there is a shortage in the supply of raw materials, as germanium, a key material for optical rod cores, is globally scarce due to export restrictions; third, there is an imbalance in production capacity, with A-fiber production capacity exceeding 50% of the industry, which has to some extent squeezed the supply space for G.652.D optical fibers. Additionally, "One Rating" believes that expanding production of optical rods is difficult, further exacerbating the tight supply situation of optical fibers. Firstly, expanding production of normal optical rods takes 9-12 months, while special optical rods can take as long as 2-3 years; secondly, optical rod production involves chemical pollution, strict environmental facilities and approval processes; lastly, the delivery period for optical rod production equipment is over 9 months, and the equipment needs to run continuously, as stopping it will lead to pipeline corrosion. In conclusion, "One Rating" predicts that the supply-demand pattern of optical fibers will remain tight in 2026, potentially further driving up prices of optical fibers. It should be noted that new optical fiber production capacity domestically and abroad is expected to come online in 2027, so there is uncertainty in the future trends of the industry. It is recommended to focus on leading companies in the industry, as these companies can benefit not only from outstanding performance in operator bulk purchases, but also from the growth in demand for optical fibers brought on by drones and AI development due to their advantages in the entire industry chain layout.