China Galaxy Securities has released a research report indicating that China Telecom's Guangdong branch has issued an inquiry and comparison announcement for an emergency procurement project of drop cables in the first quarter of 2026. The procurement primarily involves FTTH butterfly drop cables, with a maximum price limit of 310 yuan per kilometer for GJYXFCH-1 core cable. The increased unit price in this tender reflects the widespread market trend of significant price hikes for optical fibers. Rising demand from AI applications and a slow supply ramp-up are expected to boost product gross margins and increase demand for high-margin products, potentially initiating a new upward cycle for optical fiber and cable companies. The main views of China Galaxy Securities are as follows:
An event has occurred where China Telecom's Guangdong branch announced an emergency procurement inquiry for drop cables for Q1 2026. The procurement focuses on FTTH butterfly drop cables, with a maximum price limit of 310 yuan per kilometer for GJYXFCH-1 core cable. The announcement specifies the purchase of a batch of drop cables, including models such as GJXFH, GJXH, GJYXCH, and GJYXFCH. The project sets a maximum response limit price and a maximum unit price limit, with the total maximum response limit being 1,726,955.49 yuan.
The price for GJYXFCH-1 core cable has increased by 45.36%, indicating a continuing spread of industry-wide price hikes. Compared to a previous, now-suspended, framework procurement tender from January 2026 which had a maximum limit of 213.27 yuan per kilometer, the new emergency procurement price of 310 yuan represents an increase of approximately 45.36%. China Galaxy Securities believes this price increase reflects the broader market condition of significant optical fiber price adjustments. Furthermore, the nature of this procurement as an emergency project, suggesting a short cycle, combined with the previously suspended tender, may indicate that fiber shortages have become widespread.
Industry demand is robust, with operator procurement prices rising and spot prices continuing to grow. Based on operator tenders in 2025 and 2026, procurement prices for optical fibers and cables are consistently increasing. For G.652.D fiber, prices in China Telecom's 2025 provincial company procurements were around 28-35 yuan, rising to 37/46 yuan in February 2026 procurements, representing a median increase of over 31% and a maximum increase of 64.29%. For G.654.A2 fiber, China Mobile's average 2025 procurement price was about 75-80 yuan, rising to around 79.5 yuan in a February tender, the highest price in nearly five years. For G.654.E fiber, recent China Unicom procurements in Jiangsu/Shanghai were around 170-180 yuan, while China Mobile's 2025-2027 procurement price is about 189 yuan. The price for G.652.D fiber has now exceeded 50 yuan per core kilometer, a significant increase from 20 yuan in November 2025 and 35.6 yuan in January 2026, reflecting the heated state of the optical fiber and cable market.
Driven by strong demand growth, long expansion cycles, and a clear competitive landscape, the sustainability of price increases for optical fibers and cables is viewed positively. The current market is experiencing sustained price increases due to rapid AI and computing power network development, coupled with the high difficulty of capacity expansion. On the demand side, intelligent computing centers are driving substantial growth in requirements for DCI and all-optical networks. According to data from CWW and CRU, global demand for optical fiber and cable increased by 4.1% year-over-year in 2025, with demand from data centers surging by 75.9%. This trend is expected to drive global optical fiber demand to 880 million core kilometers by 2027. On the supply side, the global expansion cycle for optical preform is lengthy, typically around two years. Expansion was conservative during the previous period of price pressure, and the current market is leaning towards specialty fibers. Considering both supply and demand dynamics, optical fiber and cable prices still possess potential for further increases.
Regarding investment targets, core manufacturers in the optical fiber and cable sector are viewed favorably, including Zhongtian Technology (600522.SH), Hengtong Optic-Electric (600487.SH), Yangtze Optical Fibre and Cable (YOFC) (601869.SH, 06869), Tefa Information (000070.SZ), Yongding Co., Ltd. (600105.SH), and FiberHome Telecommunication Technologies (600498.SH).
Risk factors include the potential for capacity expansion to fall short of expectations and risks associated with changes in the international situation.