date: May 22, 2023
slug: 23
status: Published
tags: Learning
type: Post
This is just a clumsy work from my internship at the cloud; since it was directly copied and pasted from the company's writing tool page, many unique features and calculation formulas could not be displayed; the sources of the report could not be exported.
1. Definition of the Fiber Optic Cable Industry#
The fiber optic industry refers to a high-tech industry based on fiber optics as the main transmission medium. Its industrial chain includes upstream raw materials and equipment such as fiber optic preform rods, fiber optics, and optical cables, as well as downstream application fields such as communication, electricity, broadcasting, and military. The development of the fiber optic industry has been driven by national policies, the construction of new information infrastructure, and the deployment of 5G networks, making China the largest fiber optic cable market and manufacturer in the world. At the same time, technological innovation and product upgrades in the fiber optic industry have continuously improved the capacity, speed, and stability of fiber optic transmission, meeting various data transmission needs. In the industrial chain of the fiber optic industry, upstream components and equipment such as fiber optic preform rods, fiber optics, and optical cables are key technical supports. The technology and production processes of these products are highly confidential and require significant technological research and development and high-precision equipment to achieve. The downstream application fields require rich industry experience and technical strength, and the applications of the fiber optic industry are extensive, such as in communication, electricity, broadcasting, and military fields. With the deployment of 5G networks and the increasing demand for unstructured data, the demand for fiber optic transmission is also growing. Therefore, continuous technological innovation and improvement of the maturity of the industrial chain are important directions for the future development of the fiber optic industry.
2. Classification of the Fiber Optic Cable Industry#
According to application fields, fiber optics can mainly be divided into communication fiber and specialty fiber**.**
| Type Name | Type Description |
|---|---|
| Communication Fiber | Communication fiber refers to the fiber used in fiber optic communication systems, mainly used for transmitting information, usually divided into single-mode fiber and multi-mode fiber. Multi-mode fiber has a larger core diameter and can transmit multiple modes of light waves but will produce light dispersion, limiting transmission distance. Single-mode fiber has a smaller core diameter and transmits only one mode of light wave, with advantages such as wide bandwidth, low dispersion, and long transmission distance. |
| Specialty Fiber | Specialty fiber refers to various types of fibers with special functions other than conventional communication fibers, mainly used in fields such as lasers, sensors, and medical devices, usually divided into active and passive device specialty fibers, specialty fibers for lasers, and specialty fibers for fiber optic sensors. |
3. Characteristics of the Fiber Optic Cable Industry#
The fiber optic industry is a high-tech, high entry barrier, and broad prospect industry that requires technology-driven development to continuously adapt to and lead market trends. Manufacturing fiber optics requires high-precision production equipment and technology, resulting in high industry entry barriers. The fiber optic cable industry benefits from the demand for data center construction and network upgrades, receiving policy support and market expansion opportunities, with a broad outlook.
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Technology-driven
The fiber optic industry is a high-performance, high-requirement, and high-innovation industry that requires technology-driven development to continuously adapt to and lead market trends.
As an important component of the information transmission center, fiber optics have extremely high performance indicators such as transmission speed, bandwidth, and reliability, thus requiring high standards for fiber optic technology. With continuous technological development and the application of new materials, fiber optic technology is continuously iterating and updating, and the new generation of fiber optic products has higher demands in terms of transmission distance, bandwidth, and signal quality. Therefore, the fiber optic industry needs to continuously research and apply new technologies to meet market demands. Additionally, since the fiber optic industry requires significant R&D investment for the application of new materials and the promotion of new technologies, technological innovation greatly enhances the long-term investment returns and market competitiveness of the fiber optic industry.
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High entry barriers
Manufacturing fiber optics requires high-precision production equipment and technology, with strict standards and high industry entry barriers.
According to the ODC Forum's list of "Top 10 Most Competitive Companies in Global Fiber Optics and Cables 2021," five companies from China, namely Yangtze Optical Fibre and Cable, Hengtong Optic-Electric, FiberHome, Zhongtian Technology, and Futong, made the list. These five major companies dominate the market, and due to the nature of the industry, the future competitive landscape will become more stable, with the fiber optic cable industry gradually entering an oligopoly competition era.
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Broad prospects
The fiber optic cable industry benefits from the demand for data center construction and network upgrades, receiving policy support and market expansion opportunities, with broad prospects.
With the official launch of the "East Data West Computing" project, a wave of data center construction has begun, and the demand for information exchange, computing, and storage is continuously increasing, leading to a rising proportion of fiber optic cabling in data centers. Various departments, including the State Council, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, have successively issued policies to support and regulate the development of the fiber optic cable industry. In March 2021, the Ministry of Industry and Information Technology issued the "Action Plan for Coordinated Development of 'Dual Gigabit' Networks (2021-2023)," proposing to promote basic telecom companies to continuously expand the backbone transmission network, deploy ultra-high-speed, ultra-large-capacity transmission systems of 200/400Gbps as needed, enhance the comprehensive carrying capacity of the backbone transmission network, and encourage the use of new ultra-low-loss fiber optics in new trunk lines. With the popularization of science and technology, the overseas market for fiber optic broadband is also increasing, and developing countries are expected to become emerging markets.
4. Development History of Fiber Optic Cables#
The development of China's fiber optic cable industry has gone through five stages: Emergence (1977-1982), Initiation (1983-1998), Rapid Development (1999-2019), and the current industry is in the Maturity stage (2020 to present). The most competitive companies in the global market mainly come from China, the United States, and Japan. Chinese companies rely on the large domestic market to gain advantages, and the fiber optic cable industry has received continuous attention from government departments. In addition, the transformation and upgrade of fixed broadband, the deployment of 5G base stations, and the expansion of data centers will bring new demands to the fiber optic cable industry for a long time to come.
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Start Time: 1977
End Time: 1982
Stage: Emergence
Industry Dynamics: During this stage, China developed its first short-wavelength, step-index fiber using self-made equipment, with a length of 960 meters and attenuation below 20dB per kilometer, marking the official start of China's fiber optic cable industry.
Industry Impact/Stage Characteristics: Mainly focused on the basic research and experimental verification of fiber optics and optical devices, exploring the feasibility and prospects of fiber optic communication, laying the technical foundation for subsequent practical application and industrialization.
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Start Time: 1983
End Time: 1987
Stage: Initiation
Industry Dynamics: During this stage, China established its first fiber optic communication system project in Wuhan—the "82 Project," with a total length of 13.3 kilometers, a speed of 8.448M/S, and the transmission of 120 telephone lines, which was opened on December 31, 1982, marking China's entry into the era of fiber optic digital communication.
Industry Impact/Stage Characteristics: Mainly focused on the design, construction, testing, and operation of fiber optic communication systems, mastering key technologies and engineering experience for subsequent large-scale construction and expansion, providing practical models and technical support.
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Start Time: 1988
End Time: 1998
Stage: Initiation
Industry Dynamics: During this stage, China completed dozens of fiber optic communication construction projects of varying lengths, among which the most representative is the "Beijing-Hankou-Guangzhou Project" completed in 1993, with a total length of 3046 kilometers, which was the longest overhead fiber optic communication line in China and the world at that time.
Industry Impact/Stage Characteristics: Mainly focused on the planning, layout, construction, and management of fiber optic communication networks, forming a fiber optic trunk network covering all provinces and cities in the country, laying the network foundation for subsequent wavelength division multiplexing technology and capacity upgrades.
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Start Time: 1999
End Time: 2019
Stage: Rapid Development
Industry Dynamics: During this stage, with the explosive growth of information technologies such as the Internet and mobile communication, higher demands were placed on the capacity, speed, and stability of fiber optic communication systems. China not only strengthened the industrialization and scaling of fiber optic and optoelectronic products but also made many breakthrough advancements, synchronizing with or even leading the world in coherent optical technology, space division multiplexing technology, and silicon photonic integration technology.
Industry Impact/Stage Characteristics: Mainly focused on technological innovation, product upgrades, standard formulation, and market expansion of fiber optic communication systems, meeting various data demands. The industry impact of this stage is to provide strong information infrastructure and communication technology support for the subsequent 5G era and digital economy development.
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Start Time: 2020
End Time: 2023
Stage: Maturity
Industry Dynamics: In 2021, the optical cable procurement of China's three major operators rebounded, with volume and price recovering, signaling positive trends. The demand rebounded to 245 million core kilometers, with a CAGR of only -0.40% from 2016 to 2021. The subsequent upgrades of fiber optic cables and the gradual implementation of 5G and data center applications will effectively support the demand for the fiber optic cable industry, with an expected CAGR of about 3.64% until 2026, increasing demand to 293 million core kilometers.
Industry Impact/Stage Characteristics: This stage shows characteristics of diversified business, global layout, and intelligent transformation in China's fiber optic market. Listed companies in the fiber optic industry are not only involved in the field of optical communication but also expand into new application scenarios such as industrial internet, emergency communication, and integrated communication.
5. Analysis of the Fiber Optic Cable Industry Chain#
Industry Chain Composition:
Upstream mainly includes raw materials or equipment such as fiber optic preform rods, fiber optic coatings, fiber optic bundle materials, polyethylene, and fiber optic cable production equipment. Among them, fiber optic preform rods are the most valuable link in the fiber optic cable industry chain and the most important part of the fiber optic process, accounting for about 70% of the industry's profits. The manufacturing processes of fiber optic preform rods mainly include four types: Vapor Axial Deposition (VAD), Outside Vapor Deposition (OVD), Modified Vapor Deposition (MCVD), and Plasma Chemical Vapor Deposition (PCVD). Currently, nearly ten companies in China have mastered rod-making technology, and companies with full "rod-fiber-cable" industrial chain capabilities are becoming increasingly competitive, with a clear trend of industry concentration. Midstream mainly involves the production of fiber optic cables and the provision of solutions. Fiber optic manufacturers use fiber optic preform rods for drawing and processing to manufacture fiber optics, including coating and drawing steps, with a gross profit margin of about 25%. Downstream cable companies mainly process fiber optics into cable sheathing and ultimately sell to end customers, with a gross profit margin of about 6%. Leading fiber optic manufacturers in China include Yangtze Optical Fibre, Hengtong Optic-Electric, Zhongtian Technology, Futong, and FiberHome, all of which have strong advantages in revenue, output, and technology. Downstream mainly includes application fields such as the communication industry, automotive industry, energy industry, rail transit industry (smart transportation), and marine economy (submarine cables). Among them, the communication industry is the largest demand side for fiber optic cables, accounting for over 80% of total demand. With the construction of 5G, cloud computing, and the Internet of Things, downstream demand will continue to grow, driving the development of the entire industry chain.
Industry Chain Analysis:
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Development bottlenecks and potential investment opportunities in the industry chain: The upstream link of the fiber optic cable industry chain is the rod-making process, which is a technology-intensive link that requires significant R&D investment and equipment updates. Currently, only a few companies in China have mastered the core technology, forming a high technical barrier. This also leads to a relative shortage of supply capacity in the upstream link, making it difficult to meet the demand from midstream and downstream.
Therefore, technological innovation and capacity expansion in the upstream link represent a potential investment opportunity that can improve the efficiency and competitiveness of the industry chain.
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Constraints on industry chain development: The development of the fiber optic cable industry chain is mainly influenced by downstream demand, which is affected by various factors such as policy, economy, and technology. For example, the construction of 5G networks is currently the largest demand driver, but the speed of 5G network deployment and coverage is constrained by spectrum resources, base station construction, and terminal popularity. Additionally, the fiber optic cable industry chain also faces pressures such as rising costs, falling prices, and intensified market competition, necessitating continuous improvement in product quality and performance, reduction of production costs, and expansion into new application fields to maintain market advantages.
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Price transmission capability of the industry chain: The price transmission capability of the fiber optic cable industry chain refers to the extent to which changes in the prices of upstream raw materials or equipment affect the prices of midstream and downstream products. Generally, price transmission capability depends on the supply-demand relationship between upstream and downstream, the existence of substitutes, contract forms, and other factors. In the fiber optic cable industry chain, due to the high technical barriers and added value of the upstream rod-making process, and the relatively tight supply, changes in upstream prices have a strong transmission capability to downstream. Conversely, due to intense competition and low product differentiation in midstream and downstream, price changes in midstream and downstream have a weak transmission capability to upstream.
| Upstream Link | Upstream Analysis | Upstream Participants |
|---|---|---|
| Fiber Optic Preform Rods | Fiber optic preform rods are the most important raw material for fiber optic cables, and their price and quality directly affect the cost and performance of fiber optic cables. According to Baidu Encyclopedia, the average price of domestic fiber optic preform rods in the first half of 2022 was 155,000 yuan/kg, an increase of 14.8% compared to the first half of 2021. The price fluctuations of fiber optic preform rods are mainly influenced by market supply and demand, raw material costs, and technological advancements. The main raw materials for fiber optic preform rods include quartz tubes, high-purity silicon tetrachloride, high-purity germanium tetrachloride, and holding rods, among which the domestic production level of quartz tubes and high-purity silicon tetrachloride is relatively low and mainly relies on imports, thus being affected by international market prices and exchange rate fluctuations. - Quartz tubes: Domestic production is currently difficult, mainly relying on imports, with foreign manufacturers including Germany's Heraeus, Qsil, and the United States' Momentive and Japan's Tosoh. - High-purity silicon tetrachloride: Purified from polycrystalline silicon production waste, the technology has long been monopolized by Japanese and German companies, and domestic production is in progress. Currently, domestic companies capable of production include Jiangsu Jinko Energy and Jiangxi LDK. - High-purity germanium tetrachloride: Used to adjust the refractive index of fiber optics, it is an important additive for fiber optic preform rods. Currently, domestic companies capable of production include Beijing Guojinghui and Wuhan Yunjingfei. - Holding rods: Used to fix the center position of fiber optic preform rods, they are important auxiliary materials in the fiber drawing process. Currently, domestic companies capable of production include Feilihua, Beijing Jiuzhi Optoelectronics, and Jinglei Quartz. The supply of fiber optic preform rods mainly comes from domestic and foreign rod manufacturers, with domestic manufacturers occupying a large market share. According to encyclopedia data, the total production capacity of domestic fiber optic preform rods in the first half of 2022 was about 20,000 tons, with an actual output of about 16,000 tons and a capacity utilization rate of about 80%. The demand for fiber optic preform rods mainly comes from domestic and foreign fiber optic manufacturers, with domestic manufacturers accounting for the vast majority of market demand. In the first half of 2022, the total demand for domestic fiber optic preform rods was about 15,000 tons, an increase of 15% compared to the first half of 2021. The demand growth for fiber optic preform rods is mainly driven by downstream application fields such as 5G construction, data center expansion, and submarine cable laying. From the supply-demand relationship perspective, the current domestic fiber optic preform rod market shows a situation of oversupply, but with the continuous growth of downstream demand and the exploration of international markets, the supply-demand balance is expected to improve in the future. The fiber optic preform rod industry is a technology-intensive, capital-intensive industry with significant scale effects, resulting in high industry concentration, with leading companies having strong competitive advantages. In the first half of 2022, the top five manufacturers in the domestic fiber optic preform rod market (Yangtze, Hengtong, Zhongtian, Futong, and FiberHome) accounted for a total market share of 95%, with Yangtze Optical Fibre maintaining a leading position with a 45% market share, and Hengtong Optic-Electric and Zhongtian Technology holding second and third places with 20% and 15% market shares, respectively. These leading companies not only possess high levels of rod-making technology and scale effects but also have integrated production capabilities of "rod-fiber-cable," effectively reducing costs and improving efficiency. Additionally, these companies actively explore international markets, establishing cooperative relationships with foreign fiber optic manufacturers to enhance their brand influence and market share. | Jinko Solar Co., Ltd., Jiangxi LDK Solar High-Tech Co., Ltd., Beijing Guojinghui Infrared Optical Technology Co., Ltd., Wuhan Yunjingfei Fiber Material Co., Ltd., Hubei Feilihua Quartz Glass Co., Ltd., Jiuzhi Optoelectronic Materials Technology Co., Ltd., China National Building Material Group Corporation Quzhou Jinglei Quartz Co., Ltd. |
| Fiber Optic Coatings | Fiber optic coatings are used to protect optical glass fibers from external environmental impacts, maintaining sufficient mechanical strength and optical performance, and are an important component of communication fiber optics. The main raw materials for fiber optic coatings are UV curing materials, including monomers, oligomers, photoinitiators, and additives. The market scale of fiber optic coatings corresponds to the demand for fiber optics; approximately 0.45 tons of fiber optic coatings are needed to produce 10,000 core kilometers of fiber optics. In 2022, China's fiber optic output reached 345 million core kilometers, generating a demand of about 17,300 tons for fiber optic coatings in the domestic market. Based on a sales price of 40,000 yuan/ton, the market scale is less than 700 million. The market competition for fiber optic coatings is relatively intense, with major suppliers including Feikai Materials, Germany's BASF, and the United States' Hirschmann. Among them, Feikai Materials is the largest producer of UV curing fiber optic coatings in China, holding a 60% market share domestically and ranking first globally. | Shanghai Feikai Material Technology Co., Ltd., Germany BASF, United States Hirschmann |
| Fiber Optic Bundle Materials | Fiber optic bundle materials are used to protect the fiber core lines in fiber optic cables, mainly made from high-density polyethylene (HDPE), low-density polyethylene (LDPE), polypropylene (PP), and other plastics. The market scale of fiber optic bundle materials is related to the demand for fiber optic cables, which is continuously growing due to the promotion of new infrastructure construction such as 5G, the Internet of Things, and cloud services. The market competition for fiber optic bundle materials is relatively fragmented, with major suppliers including Zhongtian Technology, Hengtong Optic-Electric, FiberHome, Futong Information, and foreign companies such as Corning and Furukawa Electric. Among them, Zhongtian Technology is the largest producer of fiber optic bundle materials in China, holding over 30% of the domestic market share. | Jiangsu Zhongtian Technology Co., Ltd., Jiangsu Hengtong Optic-Electric Co., Ltd., FiberHome Communication Technology Co., Ltd., Tianjin Futong Information Technology Co., Ltd., Japan's Furukawa Electric |
| Polyethylene | Polyethylene is a thermoplastic resin made from the polymerization of ethylene, widely used in the manufacture of films, containers, pipes, wires and cables, daily necessities, etc., and is one of the main varieties of synthetic resins. The market scale of polyethylene is related to the demand for synthetic resins, which is continuously growing due to the promotion of new infrastructure construction such as 5G, the Internet of Things, and cloud services. The market competition for polyethylene is relatively fragmented, with major suppliers including Sinopec, PetroChina, and CNOOC, as well as foreign companies such as Corning and ExxonMobil. Among them, Sinopec is the largest producer of polyethylene in China, holding over 30% of the domestic market share. The trade deficit for polyethylene is significant, as China is the world's largest importer of polyethylene, with imports reaching 13.47 million tons in 2022, accounting for nearly one-third of the total global polyethylene imports; the import volume of polypropylene accounts for nearly one-fourth of the total imports of various countries. | China Petroleum and Chemical Corporation, China Petroleum and Chemical Corporation, China National Offshore Oil Corporation, ExxonMobil |
| Fiber Optic Cable Production Equipment | Fiber optic cable production equipment is mechanical equipment used to manufacture fiber optic cables, including fiber drawing machines, fiber coating machines, fiber winding machines, fiber cabling machines, and fiber sheathing machines. The market scale of fiber optic cable production equipment is related to the demand for fiber optic cables, which is continuously growing due to the promotion of 5G, gigabit optical networks, and new infrastructure construction. It is expected that the global fiber optic cable market size will reach 42 billion USD by 2023. The market competition for fiber optic cable production equipment is relatively concentrated, with major suppliers including Zhongtian Technology, Hengtong Optic-Electric, and FiberHome, as well as foreign companies such as Siemens and Corning. Among them, Zhongtian Technology is the largest manufacturer of fiber optic cable production equipment in China, holding over 40% of the domestic market share. The technological development trend of fiber optic cable production equipment is moving towards high-speed, high-efficiency, and intelligent directions to meet the production needs of different types and specifications of fiber optic cables, improving production efficiency and quality while reducing costs and energy consumption. | Jiangsu Zhongtian Technology Co., Ltd., Jiangsu Hengtong Optic-Electric Co., Ltd., FiberHome Communication Technology Co., Ltd., Germany Siemens, United States Corning |
| Midstream Link | Midstream Analysis | Midstream Participants |
|---|---|---|
| Production and solution providers for fiber optic cables | The midstream mainly involves the production of fiber optic cables and the provision of solutions. In the first half of 2022, the top five manufacturers in the domestic fiber optic preform rod market (Yangtze, Hengtong, Zhongtian, Futong, and FiberHome) accounted for a total market share of 95%, with Yangtze Optical Fibre maintaining a leading position with a 45% market share, and Hengtong Optic-Electric and Zhongtian Technology holding second and third places with 20% and 15% market shares, respectively. These leading companies not only possess high levels of rod-making technology and scale effects but also have integrated production capabilities of "rod-fiber-cable," effectively reducing costs and improving efficiency. Additionally, these companies actively explore international markets, establishing cooperative relationships with foreign fiber optic manufacturers to enhance their brand influence and market share. The profitability of the fiber optic cable industry is mainly influenced by market supply and demand, raw material costs, and technological innovation. In 2022, the average gross profit margin of the domestic fiber optic cable industry was 17.8%, a decrease of 0.8 percentage points compared to the first half of 2021. The business model of the fiber optic cable industry mainly achieves profitability through product sales and solution services. Product sales mainly involve providing various specifications and types of fiber optic cable products to downstream customers, including standard, specialty, and submarine types. Solution services mainly involve providing comprehensive network planning, design, construction, and operation services to downstream customers, including FTTH, 5G bearer networks, and data center interconnections. According to research institutions, the average revenue of the domestic fiber optic cable industry in the first half of 2022 was 18.93 billion yuan, with product sales accounting for 76.3% and solution services accounting for 23.7%. The technological route of the fiber optic cable industry mainly includes two aspects: the manufacturing process of fiber optic preform rods and the structural design of fiber optic cables. The former determines the transmission characteristics and cost of fiber optics, while the latter determines the performance and application range of fiber optic cables. Currently, the commercial production of fiber optic preform rods has developed into a "two-step method," where the first step is to produce the core rod, and the second step is to add an outer cladding layer to the core rod to form the preform rod. The core rod manufacturing processes mainly include four types: Vapor Axial Deposition (VAD), Outside Vapor Deposition (OVD), Modified Vapor Deposition (MCVD), and Plasma Chemical Vapor Deposition (PCVD). Among them, the MCVD operation mode is simple; OVD/VAD has low requirements for raw material purity, which can effectively control costs; and PCVD has high raw material utilization and more precise refractive index distribution. The structural design of fiber optic cables mainly includes two types: single-core fiber optic cables and multi-core fiber optic cables. Single-core fiber optic cables refer to cables with only one core layer, suitable for long-distance and high-speed transmission. Multi-core fiber optic cables refer to cables with multiple core layers, suitable for short-distance and high-capacity transmission. The structural design of fiber optic cables also needs to consider different application scenarios and environmental conditions, such as underwater, underground, and aerial, as well as different functional requirements, such as tensile, compressive, bending, and temperature change resistance. | Tianjin Futong Information Technology Co., Ltd., FiberHome Communication Technology Co., Ltd., Jiangsu Zhongtian Technology Co., Ltd., Jiangsu Hengtong Optic-Electric Co., Ltd., Yangtze Optical Fibre and Cable Co., Ltd. |
| Downstream Link | Downstream Analysis | Downstream Participants |
|---|---|---|
| Communication Operators | Communication operators are the core consumer group of fiber optic cables, mainly used for building access networks, bearer networks, and core networks to meet the demands of new technologies such as FTTH, 5G, and IPv6. Communication operators include China Telecom, China Mobile, China Unicom, China Broadcasting Network, and China Tower. Communication operators are the largest demand side for fiber optic cables, accounting for about 80% of the overall market. Communication operators mainly use fiber optic cables to build fixed broadband networks and mobile communication networks to provide high-speed, high-quality information transmission services. In the entire fiber optic cable market, the role of communication operators is: - To promote technological innovation and product upgrades in fiber optic cables. With the development of new technologies such as 5G, the Internet of Things, and cloud computing, communication operators have higher requirements for the performance, quality, and stability of fiber optic cables, prompting upstream manufacturers to continuously develop new types of fiber optic cables, such as single-mode fiber, dispersion-shifted single-mode fiber, and ultra-long wavelength fiber. - To drive the large-scale production and consumption of fiber optic cables. With the implementation of national policies such as "Broadband China," "Three Networks Integration," and "Dual Gigabit," communication operators have increased their efforts in building fixed broadband networks and 5G networks, increasing the demand for fiber optic cables. According to statistics, in 2022, the newly built fiber optic cable line length reached 4.772 million kilometers, with the total length of fiber optic cable lines nationwide reaching 54.88 million kilometers. - To influence the price trends and competitive landscape of fiber optic cables. As the largest purchaser, communication operators have significant bargaining power over the prices of fiber optic cables and will also choose suitable suppliers through bidding and competitive pricing, thereby affecting the profit levels and market shares of upstream manufacturers. Generally, when the investment scale of communication operators increases, it will drive the growth of demand for fiber optic cables and price increases; conversely, it will lead to reduced demand and price declines. | China Telecom Group Corporation, China Mobile Communications Group Co., Ltd., China United Network Communications Co., Ltd., China Broadcasting Network Co., Ltd., China Tower Corporation |
| Broadcasting Operators | Broadcasting operators are an important consumer group for fiber optic cables, mainly used for building cable television networks and internet access networks to meet the needs of three-network integration and smart cities. In the entire fiber optic cable market, the role of broadcasting operators is: - To promote the diversification and differentiation of fiber optic cables. The demand for fiber optic cables from broadcasting operators differs from that of communication operators, placing more emphasis on bandwidth, reliability, and anti-interference capabilities, while also needing to meet the requirements of various business scenarios, such as indoor, outdoor, underground, and underwater. This has driven upstream manufacturers to develop fiber optic cable products suitable for different environments and applications, such as broadband single-mode fiber, low-water-peak single-mode fiber, and submarine fiber. - To increase new growth points and market space for fiber optic cables. As new entrants holding 5G licenses, broadcasting operators are expected to play an important role in 5G network construction, especially with the coverage advantages of the 700MHz frequency band and the integration advantages of broadcasting resources. It is predicted that from 2021 to 2025, China Broadcasting will invest about 200 billion yuan in 5G network construction, with about 50 billion yuan allocated for purchasing fiber optic cables. In addition, broadcasting operators will accelerate the digital transformation and upgrade of cable television networks, promoting the popularization of gigabit broadband services, further driving the demand for fiber optic cables. - To enhance the competitiveness and innovation capabilities of fiber optic cables. As new market participants, broadcasting operators have their own standards and requirements for fiber optic cable procurement, and they will also form competitive and cooperative relationships with communication operators. This motivates upstream manufacturers to improve their product quality, technological level, and service capabilities to meet the needs and expectations of different customers, thereby enhancing the competitiveness and innovation capabilities of the entire industry. | China Broadcasting Network Co., Ltd., various provincial and municipal broadcasting network companies |
| Data Centers | Data centers are emerging consumers of fiber optic cables, mainly used for building internal interconnections and interconnections between data centers to meet the demands of cloud computing and big data. The actual application scenario involves using fiber optic cables to connect servers, switches, routers, and other devices to provide high-speed, high-capacity, and high-reliability data transmission. In the entire fiber optic cable market, the role of data centers is: - To promote the high-speed and high-density development of fiber optic cables. The demand for fiber optic cables from data centers differs from that in traditional communication fields, placing more emphasis on the speed, density, and flexibility of fiber optic cables, while also needing to meet the requirements of various network architectures and protocols, such as Ethernet, PCIe, and InfiniBand. This has driven upstream manufacturers to develop fiber optic cable products suitable for different data center scales and applications, such as single-mode fiber, multi-mode fiber, and active fiber. - To increase new growth points and market space for fiber optic cables. As an important component of new information infrastructure, data centers are expected to play a key role in digital economy, new infrastructure, and industrial internet fields, especially driven by new technologies such as cloud computing, big data, and artificial intelligence. It is predicted that from 2021 to 2025, the demand for fiber optic cables in China's data center construction is expected to reach 20 to 40 million core kilometers. In addition, data centers will accelerate the development towards edge computing, promoting the popularization of distributed network architectures, further driving the demand for fiber optic cables. | Beijing Century Internet Broadband Data Center Co., Ltd., GDS Services Ltd., Beijing Guanghuan New Network Technology Co., Ltd., Shanghai Data Port Co., Ltd., Guangdong Aofei Data Technology Co., Ltd. |
| Government Agencies and Enterprise Clients | Government agencies and enterprise clients are potential consumers of fiber optic cables, including government departments, financial institutions, power systems, transportation, education, and healthcare sectors' data communication and information construction needs. Government agencies and enterprise clients are important consumers of fiber optic cables, mainly using fiber optic cables to connect office buildings, data centers, monitoring systems, and other devices to provide secure, efficient, and stable data transmission. In the entire fiber optic cable market, the role of government and enterprise clients is: - To promote the diversification and personalization of fiber optic cables. The demand for fiber optic cables from government agencies and enterprise clients differs from that of communication operators, placing more emphasis on the security, reliability, and flexibility of fiber optic cables, while also needing to meet various application scenarios and functional requirements, such as fire and explosion resistance, electromagnetic interference resistance, and tensile strength. This has driven upstream manufacturers to develop fiber optic cable products suitable for different industries and fields, such as specialty fibers, indoor cables, and micro cables. - To enhance the competitiveness and innovation capabilities of fiber optic cables. As new market participants, government agencies and enterprise clients have their own standards and requirements for fiber optic cable procurement, and they will also form competitive and cooperative relationships with other industries. This motivates upstream manufacturers to improve their product quality, technological level, and service capabilities to meet the needs and expectations of different customers, thereby enhancing the competitiveness and innovation capabilities of the entire industry. | Government agencies at all levels and private enterprises |
6. Scale of the Fiber Optic Cable Industry#
According to the "Top 10 Most Competitive Companies in Global/China Optical Communication" lists published by the Network Telecom Information Research Institute from 2017 to 2022, Yangtze Optical Fibre's market share in the global market fluctuated between 9.14% and 14% from 2017 to 2022, ranking second. Using the formula for estimating the fiber optic cable market size = Yangtze Optical Fibre's fiber optic cable sales / Yangtze Optical Fibre's fiber optic cable market share, the market size for fiber optic cables in 2022 was estimated to be 100.072 billion yuan. From 2017 to 2022, the market size of the fiber optic cable industry experienced fluctuating growth. In 2017, the industry size was 81.622 billion yuan, slightly decreased to 81.135 billion yuan in 2018, and then saw a significant shrinkage in 2019, dropping to 64.741 billion yuan. In 2020 and 2021, the industry sizes were 90.34 billion yuan and 79.466 billion yuan, respectively, and in 2022, it rebounded to 100.072 billion yuan. We used a linear regression model to predict the market size of the fiber optic cable industry from 2023 to 2027. According to the predicted results, the market size will reach 94.18 billion yuan in 2023, then gradually increase to 97.404 billion yuan in 2024, 100.628 billion yuan in 2025, 103.852 billion yuan in 2026, and 107.076 billion yuan in 2027. This prediction indicates that the fiber optic cable industry is showing a stable growth trend.
The changes in the market size of China's fiber optic cable industry are mainly influenced by demand pull, supply changes, and technological breakthroughs.
Demand Pull: With the construction and application of new information infrastructure such as 5G networks, gigabit optical networks, the Internet of Things, and cloud computing, the demand for fiber optic cables continues to grow. According to data from the Ministry of Industry and Information Technology, the length of newly built fiber optic cable lines reached 4.28 million kilometers in 2020, an increase of 11% compared to 2019. The 2021 "Government Work Report" explicitly required increasing efforts in the construction of 5G networks and gigabit optical networks, enriching application scenarios. The "Action Plan for Coordinated Development of 'Dual Gigabit' Networks (2021-2023)" issued by the Ministry of Industry and Information Technology pointed out that by the end of 2023, the gigabit optical fiber network will have the capacity to cover 300 million households, with more than 20 million ports of 10G passive optical networks (10G-PON) and above, and gigabit broadband users exceeding 50 million. These policies and goals will further stimulate the market demand for fiber optic cables.
Supply Changes: With fluctuations in domestic and foreign market demand, the supply of fiber optic cables has also shown different changes. From 2017 to 2019, due to the rapid development of domestic and foreign communication infrastructure construction and the implementation of domestic anti-dumping policies, the domestic production of fiber optic preform rods increased from 4,271 tons to 11,098 tons, a growth of 159.8%. In 2020, affected by the COVID-19 pandemic, global communication market demand was sluggish, and domestic and foreign operators reduced procurement volumes, leading to a decline in domestic production of fiber optic preform rods to about 12,000 tons. Since 2021, with the improvement of the pandemic prevention situation and the recovery of the communication market, domestic and foreign operators have increased investment, promoting the recovery of domestic production of fiber optic preform rods.
Technological Breakthroughs: With continuous advancements and innovations in communication technology, higher requirements have been placed on the performance and quality of fiber optic cables. To meet the application needs of different fields and scenarios, domestic and foreign companies are continuously developing new, specialty, and high-end fiber optic cable products. For example, in the 5G field, to address the high loss, low bandwidth, and susceptibility to interference of traditional copper cables, Hengtong Optic-Electric launched a 5G front-haul solution based on passive wavelength division multiplexing technology (PON)—the Hengtong PON+ solution. This solution utilizes specially designed PON+ splitters and PON+ modules to achieve the multiplexing and separation of multiple wavelength signals on a single-core single-mode fiber, effectively improving signal transmission efficiency and quality.
Future Predictions: Based on the revenue and market share of Yangtze Optical Fibre, it is estimated that from 2023 to 2027, the scale of China's fiber optic cable industry will grow from 94.18 billion yuan to 107.076 billion yuan, with a gradually slowing growth rate. To predict the market size for the next five years, we used a linear regression model, assuming a linear relationship between market size and time. Based on the known market size data from 2017 to 2022, a linear equation was fitted, and this equation was used to predict the market size for the next five years. According to the predicted results, the market size will reach 94.18 billion yuan in 2023, then gradually increase to 97.404 billion yuan in 2024, 100.628 billion yuan in 2025, 103.852 billion yuan in 2026, and 107.076 billion yuan in 2027. This prediction indicates that the fiber optic cable industry is showing a growth trend.
7. Policy Overview of Fiber Optic Cables#
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Policy Name: "Guiding Opinions on Accelerating 5G Network Construction"
Issuing Authority: National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Finance, Ministry of Natural Resources, Ministry of Housing and Urban-Rural Development, Ministry of Transport, Ministry of Water Resources, Ministry of Agriculture and Rural Affairs, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission
Effective Date: July 2020
Impact: 9
Policy Nature: Guiding policy
Policy Content: This policy aims to accelerate 5G network construction, enhance network coverage and quality, promote the integrated development of 5G with cloud computing, the Internet of Things, artificial intelligence, and other new technologies, support the innovative application of 5G in various fields, and promote the deep integration of the digital economy and the real economy.
Policy Interpretation: This policy is an important guiding opinion from the state on 5G network construction, reflecting the government's high attention and support for information and communication infrastructure construction, providing a favorable policy environment and market opportunities for the fiber optic cable industry. This policy is beneficial for improving the coverage and quality of 5G networks, promoting the integrated development of 5G with new technologies, supporting the innovative application of 5G in various fields, and promoting the deep integration of the digital economy and the real economy.
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Policy Name: "14th Five-Year Plan for National Informatization"
Issuing Authority: Central Cyberspace Affairs Commission
Effective Date: January 2022
Impact: 8
Policy Nature: Guiding policy
Policy Content: Digital infrastructure has become a strategic focus for the digital development of various countries, and China aims to strengthen, consolidate, and maintain its position as a global center for the Internet and submarine cable networks in the new era.
Policy Interpretation: The overall goal of this policy is to achieve decisive progress in building a digital China by 2025, with a significant leap in the level of informatization development. Major tasks include building a ubiquitous intelligent digital infrastructure system, establishing an efficient data element resource system, constructing an innovative development system that releases digital productivity, cultivating an advanced and secure digital industry system, building an industrial digital transformation development system, establishing a co-built, co-governed, and shared digital social governance system, creating a collaborative and efficient digital government service system, building an inclusive and convenient digital livelihood guarantee system, expanding a mutually beneficial and win-win international cooperation system in the digital field, and establishing a sound and orderly digital development governance system, with ten major tasks and 17 key projects identified as important means to implement these tasks.
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Policy Name: "14th Five-Year Plan for Digital Economy Development"
Issuing Authority: State Council
Effective Date: January 2022
Impact: 9
Policy Nature: Guiding policy
Policy Content: To orderly promote the expansion of backbone networks, collaboratively advance the construction of gigabit optical fiber networks and 5G network infrastructure, promote the commercial deployment and large-scale application of 5G, and proactively lay out the technological reserves for sixth-generation mobile communication (6G) networks. Increase support for 6G technology R&D and actively participate in promoting the international standardization of 6G.
Policy Interpretation: This policy plan focuses on data as a key element, with the deep integration of digital technology and the real economy as the main line, strengthening the construction of digital infrastructure, improving the digital economy governance system, collaboratively promoting the industrialization of digital technologies and the digitalization of industries, empowering the transformation and upgrading of traditional industries, and cultivating new industries, new business formats, and new models. The development goal is that by 2025, the digital economy will enter a period of comprehensive expansion, with the added value of the core digital economy industry accounting for 10% of GDP, and China's digital economy will fully enter a new stage of coordinated development of "four transformations": data value realization, industrial digitalization, digital industrialization, and digital governance.
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Policy Name: "Implementation Plan for Carbon Peak in the Industrial Sector"
Issuing Authority: Ministry of Industry and Information Technology
Effective Date: August 2022
Impact: 9
Policy Nature: Guiding policy
Policy Content: Strengthen the coordinated interaction between source, network, load, and storage, guide enterprises and parks to accelerate the integrated system development and operation of distributed photovoltaics, smart energy management, etc., promote the efficient complementary use of multiple energy sources, and facilitate the large-scale consumption of renewable energy nearby.
Policy Interpretation: The overall goal of this policy is to achieve positive progress in optimizing the industrial structure and energy consumption structure during the "14th Five-Year Plan" period, significantly improve the efficiency of energy resource utilization, establish a number of green factories and green industrial parks, and research, demonstrate, and promote a number of low-carbon and zero-carbon technology processes and equipment products with significant emission reduction effects, laying a solid foundation for achieving carbon peak in the industrial sector. By 2030, the energy consumption per unit of added value in large-scale industrial units will decrease by 13.5% compared to 2020, and the carbon dioxide emissions per unit of industrial added value will decrease more than the overall social reduction rate, with significant reductions in carbon dioxide emission intensity in key industries. During the "15th Five-Year Plan" period, based on achieving carbon peak in the industrial sector, strengthen carbon neutrality capabilities, and basically establish a modern industrial system characterized by high efficiency, greenness, circularity, and low carbon. Ensure that carbon dioxide emissions in the industrial sector peak before 2030.
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Policy Name: "Notice on Further Improving the Management of Fiber Optic Cable Product Identification for Telecom User Lines"
Issuing Authority: Ministry of Industry and Information Technology
Effective Date: September 2021
Impact: 7
Policy Nature: Regulatory policy
Policy Content: This policy is a supplement and improvement to the "Management Measures for Fiber Optic Cable Product Identification for Telecom User Lines," mainly aimed at standardizing the management of fiber optic cable product identification for telecom user lines, ensuring the quality and safety of fiber optic cable products for telecom users, and protecting the legitimate rights and interests of consumers.
Policy Interpretation: This policy is an administrative regulation issued by the Ministry of Industry and Information Technology to further standardize the market order of fiber optic cable products for telecom user lines, ensure the quality and safety of fiber optic cable products for telecom users, and protect the legitimate rights and interests of consumers. This policy is beneficial for improving the identification management level of fiber optic cable products for telecom user lines, enhancing product traceability and recognizability, and promoting fair competition in the market.
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Policy Name: "Guiding Opinions on Accelerating the Construction of New Infrastructure"
Issuing Authority: National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Science and Technology, Ministry of Education, Ministry of Transport, Ministry of Water Resources, Ministry of Agriculture and Rural Affairs, Ministry of Ecology and Environment, Ministry of Housing and Urban-Rural Development, Ministry of Commerce, Ministry of Culture and Tourism, National Health Commission, Ministry of Emergency Management
Effective Date: April 2020
Impact: 9
Policy Nature: Guiding policy
Policy Content: This policy aims to accelerate the construction of new infrastructure, enhance the national development strategic capacity and economic and social development level, support high-quality development and supply-side structural reform, and promote the deep integration of the digital economy and the real economy.
Policy Interpretation: This policy is an important guiding opinion from the state on the construction of new infrastructure, reflecting the government's high attention and support for digital transformation and innovation-driven development, providing a favorable policy environment and market opportunities for the fiber optic cable industry. This policy is beneficial for improving the construction level and service capacity of new infrastructure, promoting the deep integration of the digital economy and the real economy, and supporting high-quality development and supply-side structural reform.
8. Competitive Landscape of Fiber Optic Cables#
The competitive landscape of China's fiber optic cable industry is favorable, and the rising demand is expected to drive the overall healthy development of the industry. In the "Top 10 Most Competitive Companies in Global Optical Communication 2022" list, five companies from China made the list, namely Yangtze Optical Fibre, Hengtong Optic-Electric, FiberHome, Zhongtian Technology, and Futong Communications, with market shares of 9%, 8%, 6%, 6%, and 7%, respectively. Currently, the global fiber optic cable industry market is showing a high degree of concentration. According to data from the Optical Communication Committee of the China Communications Society, the market share of the top 10 companies globally fluctuated from 94% in 2018 to 86%; although the concentration has decreased, it remains high. Among fiber optic cable companies, most have completed a relatively complete industrial chain. Among them, Yangtze Optical Fibre and Hengtong Optic-Electric have the most complete industrial chains, from optical rods to fibers to cables to optical devices, and they independently research, produce, and sell. Additionally, from the perspective of sales regions, most companies adopt a joint marketing strategy both domestically and internationally; after meeting domestic demand, they export to foreign markets.
Analysis of Formation Reasons:
One is the support and guidance of national policies. The Chinese government places great importance on the construction of new infrastructure, especially the development of 5G and gigabit optical networks, providing significant market space and policy dividends for the fiber optic cable industry. At the same time, the state has also introduced a series of anti-dumping and anti-subsidy measures to protect the legitimate rights and interests of domestic fiber optic cable companies and resist external competitive pressures.
Two is the continuous growth of domestic market demand. With the further development of Internet services, the construction of mobile communication networks, and the continuous realization of new applications such as the Internet of Things and cloud computing, the fiber optic cable industry will usher in broader development opportunities. According to statistics, in 2020, the length of fiber optic cable lines in China reached 51.69 million kilometers, and from January to October 2021, the cumulative output was 26,006.6 million kilometers, with a cumulative growth of 13.3%.
Three is the technological innovation and industrial chain layout of domestic companies. Chinese fiber optic cable companies have made significant progress in technological R&D, production capacity, product quality, and brand influence. Some companies have achieved a complete industrial chain layout from optical rods to fibers to cables to optical devices, enhancing their independent innovation capabilities and market competitiveness. At the same time, domestic companies are also actively expanding into overseas markets, increasing their international influence and market share.
Four is the changing domestic and international market environment. Affected by the COVID-19 pandemic, global demand for fiber optic cables has been sluggish, and some countries have imposed restrictions or bans on Chinese products, posing certain challenges to Chinese fiber optic cable companies. However, this also presents opportunities for domestic companies, prompting them to accelerate transformation and upgrading, increasing product added value and differentiated competitiveness.
Trend Predictions: The degree of concentration will further increase, industry differentiation will intensify, and international development will accelerate.
One is that market concentration will further increase, and the industry structure will tend to stabilize. With the advancement of new infrastructure construction such as 5G and gigabit optical networks, the demand for fiber optic cables will continue to grow, while also placing higher demands on product quality, technical level, and service capabilities. This will benefit leading companies to further consolidate and expand their market share, forming scale effects and brand effects, enhancing industry barriers, and suppressing the entry of potential competitors. It is expected that by 2025, the market concentration CR10 of China's fiber optic cable industry will reach over 90%.
Two is that technological innovation will become the core competitiveness, and industry differentiation will intensify. With the advancement of new infrastructure construction such as 5G and gigabit optical networks, higher demands will be placed on the performance, quality, and reliability of fiber optic cables. This will prompt companies to increase investment in technological R&D, continuously launch new products, new technologies, and new applications to meet the needs of different customers and scenarios. At the same time, companies will also expand into new fields and markets through mergers and acquisitions and cross-border cooperation to achieve diversified development. It is expected that by 2025, China's fiber optic cable industry will form a competitive landscape in various segments, with leaders in specialty fiber represented by Yangtze Optical Fibre, Hengtong Optic-Electric, and FiberHome, leaders in marine communication represented by Zhongtian Technology and Futong Information, and leaders in military communication represented by Hanxin Optoelectronics and Tefa Information.
Three is that international development will accelerate, and the industry's influence will further increase. As the technological level and product quality of China's fiber optic cable industry continue to improve, domestic market demand gradually saturates, and foreign market demand continues to grow, Chinese fiber optic cable companies will accelerate their international development pace, actively expanding into overseas markets. At the same time, Chinese fiber optic cable companies will also actively participate in the formulation of international standards and international cooperation and exchanges, enhancing their voice and influence globally. It is expected that by 2025, Chinese fiber optic cable companies will account for over 60% of the global market share.
9. Analysis of Fiber Optic Cable Companies#
Analysis of Yangtze Optical Fibre, briefly.