Open source securities: in the short term, supply may be in short supply, focus on fiber optic cable investment opportunities

The Zhitong Finance App learned that Open Source Securities released a research report saying that with the booming development of global AI, it may continue to drive demand for optical fiber cables within data centers and DCI interconnection. In addition, since air core optical fiber has advantages such as low latency, wide spectrum, low loss, and low nonlinear effects, domestic and foreign countries are actively promoting the development of new technologies such as air core optical fiber. In the long run, demand for air core optical fiber may gradually increase. In the short term, global manufacturers have limited capacity to expand production, and the bank believes that demand and prices for optical fiber cables are expected to continue to rise steadily.

The main views of Open Source Securities are as follows:

Demand side: AI data center construction and DCI interconnection or continuous drive demand for optical fiber cables

As the AI model continues to iterate on the training side, the implementation of inference side AI applications may accelerate, or continue to drive global demand for optical fiber cables. Facing massive data flow requirements within data centers, high-end single-mode and multi-mode optical fibers collaborate with ultra-high speed optical modules, or achieve efficient data transmission and flexible interconnection over short distances to promote the evolution of intelligent computing centers in the direction of higher density and lower power consumption. At the backbone network and metropolitan area network level, G.654.E optical fiber significantly increases transmission distance and system capacity, helping to build a more efficient and economical ultra-long-distance high-bandwidth network. In addition, since air core optical fiber has advantages such as low latency, wide spectrum, low loss, and low nonlinear effects, domestic and foreign countries are actively promoting the development of new technologies such as air core optical fiber. In the long run, demand for air core optical fiber may gradually increase.

Supply side: Light rod production expansion cycle is long, process requirements are high, short-term supply or tightening

The traditional optical rod expansion cycle is long. In optical fiber preparation methods, the melt core drawing method is suitable for long-distance optical fibers, mainly including prefabricated rod forming and optical fiber drawing. Among them, mainstream prefabricated rod preparation methods include PCVD, OVD, and VAD. Optical fiber drawing involves drawing a prefabricated rod at high temperature through an optical fiber drawing tower. The drawing process is not complicated, but requires coordination of rod removal speed, furnace temperature, drawing rate, etc., which requires high technical maturity and precise control yield, and is difficult to expand production. The bank believes that the continuous increase in demand for optical fiber cables places high demands on manufacturers' production capacity and may drive the operating rate of global optical fiber cable manufacturers to a higher level in the short term, but due to the long expansion cycle of optical rods and the fact that new products occupy part of the production capacity, industry supply may be tight in the short term. According to forecasts from the Asia Pacific Optical Fiber and Cable Industry Association and the Institute of Information and Communications Technology, global demand for optical fiber cables is expected to reach hundreds of millions of core kilometers in 2025 and maintain a growing trend. Prices have clearly rebounded since May. The bank judges that AI data center construction may continue to drive a steady increase in fiber optic cable demand and prices.