Fiber Optics Surge 80%—Is China’s “New Cycle” Real? Conservative vs. Aggressive Plays for Global Investors

Q: Fiber Optics Surge 80%—Is China’s “New Cycle” Real? Conservative vs. Aggressive Plays for Global Investors

You're staring at your portfolio as Chinese fiber optic stocks jump 80%—convinced this "new cycle" is your golden ticket, yet torn between FOMO and fear of a bubble burst. Most investors blindly chase the AI-driven price surge, ignoring how raw material bottlenecks and speculative margin debt could vaporize gains overnight. Our deep dive exposes why this isn't just another hype wave but a rare structural shift with explosive potential for those who navigate it right. We reveal two distinct paths: one prioritizing safety amid policy tailwinds, the other targeting explosive alpha. But choosing the wrong play could leave you stranded when the market corrects—exactly which strategy turns volatility into victory while others scramble?

Title: Fiber Optics Surge 80%—Is China’s “New Cycle” Real? Conservative vs. Aggressive Plays for Global Investors
By Arvin | February 6, 2026 | For Overseas Investors in A/H-Shares

On February 6, 2026, China’s fiber optic sector erupted. Stocks like 【杭电股份-Hangdian Cable-603618.SH-Telecom Materials】 and 【长江通信-Yangtze River Communications-600345.SH-Telecom Equipment】 surged to their daily trading limits, while giants such as 【长飞光纤-YOFC-601869.SH-Fiber Optics】 and 【亨通光电-Hengtong Optic-Electric-600487.SH-Optical Cables】 posted double-digit gains.

The catalyst? Industry data reveals that G.652.D single-mode fiber prices in China have soared over 80% year-to-date, hitting ¥35–40 per core-kilometer—a seven-year high. Analysts from Zhongjin, Minsheng, and Yongxing Securities now declare the start of a “new supply-demand cycle” driven by AI infrastructure, “East Data West Compute,” and tight raw material supply.

But is this a sustainable structural shift—or a speculative bubble?

Below, I break down the fundamentals—and offer two distinct strategies: one for conservative allocators, another for aggressive alpha-seekers.

🔍 Why Prices Are Soaring: The Dual Engine

Demand Shock: AI + National Strategy

AI data centers require 3–5× more fiber than traditional facilities—especially multimode and ultra-low-loss G.654.E fiber.
In 2025, China’s three major telecom operators procured 317.82 million core-km of G.654.E fiber—25× more than 2024.
The national “East Data West Compute” initiative continues to drive long-haul backbone construction across western provinces.

Supply Crunch: The Lightguide Rod Bottleneck

Fiber preforms (“lightguide rods”) take 2+ years to build new capacity.
After years of industry consolidation, long-tail rod capacity has been fully purged; top players are expanding cautiously.
China now controls 62% of global rod capacity—but output is being redirected to high-margin AI-grade fibers, tightening supply of standard G.652.D.

Result? “Volume and price rising together” (量价齐升)—a rare sweet spot in cyclical manufacturing.

📊 Market Sentiment: Leverage Is Piling In

According to East Money Choice data, margin financing has flooded the sector in 2026:

【天孚通信-TFC-300394.SZ-Optical Components】: ¥2.4 billion net margin buy-in (top in sector)
【烽火通信-FiberHome-600498.SH-Telecom Equipment】: ¥500+ million
【长飞光纤-YOFC-601869.SH-Fiber Optics】, 【锐科激光-Raycus-300747.SZ-Lasers】, 【光库科技-ACTC-300620.SZ-Photonics】: All saw ¥100–340 million inflows

This confirms strong institutional conviction—but also raises caution about short-term overheating.

🛡️ Conservative Strategy: Core Exposure with Quality & Liquidity

For investors seeking policy-aligned, low-volatility exposure with solid balance sheets and global relevance:

✅ Recommended Holdings (Allocate 60–70% of fiber-themed allocation):

【长飞光纤-YOFC-601869.SH / 6888.HK-Fiber Optics】
China’s #1 fiber maker, dual-listed in Shanghai and Hong Kong. Strong R&D in G.654.E and hollow-core fiber. H-share offers offshore access and lower correlation to A-market sentiment.
【亨通光电-Hengtong Optic-Electric-600487.SH-Optical Cables】
Vertically integrated (owns rod, fiber, cable), with overseas projects in Europe and Southeast Asia. Stable cash flow from power grid contracts buffers telecom cyclicality.
【中际旭创-InnoLight-300308.SZ-Optical Modules】
Not pure fiber, but critical enabler: Supplies 800G optical modules to NVIDIA, Meta, and Chinese cloud giants. Direct AI beneficiary with >35% ROE.

💡 Tactic: Use H-shares (e.g., 6888.HK) for currency diversification and easier repatriation. Pair with broad tech ETFs like 【科创50ETF-STAR 50 ETF-588000.SH-Tech】 to dilute single-stock risk.

⏳ Horizon: 18–24 months. Exit if G.652.D prices fall below ¥28/core-km or rod capacity expansion accelerates beyond 10% YoY.

🚀 Aggressive Strategy: Leveraged Bets on Innovation & Turnarounds

For investors chasing high-beta, early-cycle momentum and willing to tolerate volatility:

🔥 High-Conviction Picks (Allocate 30–40% of thematic capital):

【天孚通信-TFC-300394.SZ-Optical Components】
The “hidden champion” of photonics. Supplies precision components to every major optical module maker. Margin inflows confirm smart money positioning. High ROIC, minimal debt.
【太辰光-TS Optical-300570.SZ-Optical Connectivity】
Specializes in data center interconnects and sensing. Small cap (~¥12B market cap) = high sensitivity to AI capex cycles.
【长盈通-YOFC-Specialty Fiber-688143.SH-Specialty Fiber】
Focuses on polarization-maintaining fiber for aerospace, navigation, and quantum comms. Niche but mission-critical—potential M&A target.

💡 Tactic: Trade on quarterly procurement announcements from China Mobile/Telecom/Unicom. Use options or leveraged ETFs (if available via Stock Connect) for tactical plays.

⚠️ Risk Control: Set 15–20% stop-losses. Avoid companies without rod self-sufficiency—they’ll get squeezed in input cost spikes.

🌐 Cross-Market Note: A vs. H Access

Most pure-play fiber firms (e.g., YOFC, Hengtong) trade only in A-shares. However:

YOFC (6888.HK) is listed in Hong Kong—ideal for offshore accounts.
FiberHome (600498.SH) and TFC (300394.SZ) are accessible via Shanghai-Hong Kong Stock Connect.
Always verify Stock Connect eligibility before trading—some small caps (e.g., 688143) are excluded.

🔮 Outlook: 2–3 Year Upside, But Watch the Clock

As Minsheng Securities notes, fiber cycles typically last 2–3 years. The last bottom was in 2020 (post-5G bubble); we’re now in the early ascent phase.

Key triggers to monitor:

Q2 2026: New rod capacity announcements
June 2026: China Telecom’s next G.654.E tender
Policy shifts: Any slowdown in “East Data West Compute” funding

If demand holds and supply remains tight, sector EPS could grow 25–40% annually through 2027.

Final Word

The fiber rally isn’t just hype—it’s backed by real scarcity, AI-driven demand, and policy tailwinds. But not all players will survive the cycle.

Conservative investors should anchor in vertically integrated leaders with global footprints.
Aggressive traders can hunt innovation-focused small/mid-caps riding the AI wave.

Either way, in China’s new infrastructure era, light—not copper—is the new oil.

Disclaimer: This blog reflects analysis based on public data from East Money, securities research, and industry reports. Investing in Chinese equities involves regulatory, liquidity, and geopolitical risks. Margin trading amplifies losses. Consult your financial advisor before executing trades.

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