China Galaxy Securities Telecom Industry Review: Centralized procurement price caps hit new highs; diversification of demand shows a clear trend

Zhìtōng Finance APP learned that China Galaxy Securities released a research report stating that China Mobile has issued the bidding result for its centralized procurement project for specialty optical cable products from 2026 to 2027. Judging from the winning bid prices, among the 8 winning manufacturers, 7 submitted bids at the maximum price limit. The centralized procurement products are specialty optical cable products, including specialty-demand general-purpose (fiber bundle) optical cables (including water-line optical cables, anti-rodent optical cables, flame-retardant direct-buried optical cables, all-dielectric optical cables, and all-dielectric self-supporting optical cables), specialty-demand ribbon (fiber ribbon) optical cables (including flame-retardant non-skeleton ribbon optical cables), air-blown micro-cables, fiber-optic/electric composite cables, and five types of products in total, namely 8-shaped self-supporting optical cables.

The procurement volume of specialty optical cable products is about 79.4 thousand 皮长公里 of cable length, which is equivalent to 79.4k fiber-kilometers. The project sets a maximum bidding price limit; the maximum bidding price limit is a total price excluding tax of RMB 3.13M. Judging from the winning bid prices, except for the 1st-ranked winner, the other 7 manufacturers all submitted bids at the maximum price limit, again confirming that the trend of rising optical fiber and cable prices is significant.

China Galaxy Securities’ main points are as follows:

Event: China Mobile’s centralized procurement project for specialty optical cable products from 2026 to 2027 has released the bidding result. Judging from the winning bid prices, among the 8 winning manufacturers, 7 submitted bids at the maximum price limit.

The centralized procurement price ceiling is refreshed at a high level; emerging demand drives price increases: This centralized procurement includes specialty optical cable products, including specialty-demand general-purpose (fiber bundle) optical cables (including water-line optical cables, anti-rodent optical cables, flame-retardant direct-buried optical cables, all-dielectric optical cables, and all-dielectric self-supporting optical cables), specialty-demand ribbon (fiber ribbon) optical cables (including flame-retardant non-skeleton ribbon optical cables), air-blown micro-cables, fiber-optic/electric composite cables, and a total of five types of products, namely 8-shaped self-supporting optical cables. The procurement volume of specialty optical cable products is about 79.4 thousand 皮长公里 of cable length, which is equivalent to 251.25M fiber-kilometers. The project sets a maximum bidding price limit; the maximum bidding price limit is a total price excluding tax of RMB 79.4k. Judging from the winning bid prices, except for the 1st-ranked winner, the other 7 manufacturers all submitted bids at the maximum price limit, again confirming that the trend of rising optical fiber and cable prices is significant.

From the demand side, the core driving force in the optical fiber industry has undergone a fundamental shift: In the past, industry growth mainly depended on 5G base station construction and the large-scale deployment of FTTH. The essence was to solve whether “connectivity exists.” The three major telecom operators, with their strong bargaining power, led the centralized procurement market. However, since 2025, the global AI race has spurred the construction of extremely large-scale intelligent computing clusters. Demand from data center interconnections for high-bandwidth, low-loss optical fibers has surged, pushing the industry to officially shift from “operator infrastructure-driven” to “AI computing power-driven.” Meanwhile, large-scale deployment of optical-fiber drones in specific complex electromagnetic environments has been realized. Optical-fiber drones use their technical advantages of resistance to electromagnetic interference and high bandwidth to transmit high-definition real-time images back to the operator end, enabling remote precise operations. Such drones use G.657A2 specialty optical fiber; one drone consumes 20-50 kilometers of optical fiber and the fiber is a one-time consumable, thereby creating a structural demand pull on the specialty optical fiber market. In addition, emerging scenarios such as the industrial internet and vehicle-mounted optical fibers further open up incremental demand space that is more diversified and higher-end.

From the supply side, the core driver of this round of price increases is a bottleneck in optical fiber preform (rod) capacity: Optical preforms account for about 70% of the profit in the industrial chain. There are high technical barriers and long capacity expansion cycles of 18-24 months. Moreover, following the initial price war and the clearing out of supply, expansion has been limited, making it difficult for supply to keep up with demand growth. Currently, global preform capacity is nearing full utilization. Under capacity constraints, manufacturers have been shifting optical preform resources toward specialty optical fibers with higher added value such as G.657.A2 (for drones) and G.654.E (for AI data centers), displacing capacity for standard G.652.D optical fiber and exacerbating structural shortages. Overseas markets also face similar problems: giants such as Corning and Fujikura have long capacity-expansion cycles, and the supply shortfall in the short term is difficult to alleviate. Overall, over the coming period, there is likely further potential for price increases across different types of optical fibers and cables. The profits brought about by rising prices may also be expected to support R&D in frontier technologies such as hollow-core optical fiber, forming a virtuous cycle.

Risk notice

Risks that capacity expansion falls short of expectations; risks related to changes in international circumstances, etc.