By laney | 22 April 2026 | 0 Comments
Why are optical fiber prices rising so rapidly？
The unprecedented rapid increase in optical fiber prices is essentially the result of a fierce collision between explosive demand-side growth and rigid supply-side constraints. Simply put, demand has grown too fast and too large, while production capacity cannot keep up in the short term, leading to a severe supply-demand imbalance.
Below are the core reasons behind the rapid price increase.
AI Computing Power Demand as the Core Driver – This is the most critical factor. The explosion of AI, especially the construction of large data centers, has created massive and unprecedented demand for optical fiber.
Explosive demand scale: A single hyperscale AI data center can require 5 to 10 times more optical fiber than a traditional data center. Data shows that global data center fiber consumption reached 69.6 million fiber-kilometers in 2025, and is expected to exceed 100 million fiber-kilometers in 2026.
Upgraded demand structure: AI data centers require large volumes of high-performance specialty fibers such as G.657.A2, multimode fiber, and G.654.E to meet low-latency, high-bandwidth interconnection requirements for GPU clusters.
Soaring share of AI demand: AI-driven fiber demand is projected to rise from less than 5% of global total demand in 2024 to about 35% by 2027.
New Frontier: Drone Applications – Military consumption is exceptionally high. For example, the widespread use of fiber-optic guided drones in the Russia-Ukraine war has greatly boosted demand. After losing domestic production capacity, Russia's share of global fiber consumption jumped from less than 1% to 10.5%, relying entirely on imports from China. This has made Russia one of the fastest-growing emerging markets for Chinese fiber exports.
Global Telecom Upgrades Provide a Solid Base – Ongoing 5G network expansion and national projects like China's "East Data, West Computing" initiative also provide a large and stable base demand. In 2025 alone, the "East Data, West Computing" backbone construction drove procurement of over 3 million fiber-kilometers of G.654.E specialty fiber.
Core Bottleneck: Optical Fiber Preform – About 70% of the profit and the core technological barrier in the fiber industry chain are concentrated in the upstream optical fiber preform. Globally, only a handful of companies can produce it at scale.
Long Capacity Expansion Cycle – Building a new preform plant requires huge investment, complex technology, and a long lead time of 1.5 to 2 years from planning to actual output. This means that even if manufacturers start expanding capacity today, new supply will not hit the market until 2027 or later.
Capacity Crowding-Out Effect – As high-margin specialty fiber demand surges, preform manufacturers prioritize their limited capacity for premium products, directly squeezing the supply of traditional fibers like G.652.D, making even standard fiber tight.
Rational Industry Mindset – After experiencing the boom of 2016-2018 followed by severe overcapacity and price crashes, major industry players are highly cautious about large-scale expansion, further limiting short-term supply increases.
US-China Trade Frictions – Since September 2025, China has imposed anti-dumping duties of up to 78.2% on certain specialty fibers from the United States, affecting market supply patterns.
Regional Conflicts – As mentioned, the Russia-Ukraine conflict directly created a major new demand market for drones, further exacerbating global supply-demand imbalances.
Below are the core reasons behind the rapid price increase.
Demand Side: Diverse and Powerful New Drivers
Unlike previous cycles driven mainly by telecom operators, the current price surge is fueled by multiple emerging demand sources simultaneously.AI Computing Power Demand as the Core Driver – This is the most critical factor. The explosion of AI, especially the construction of large data centers, has created massive and unprecedented demand for optical fiber.
Explosive demand scale: A single hyperscale AI data center can require 5 to 10 times more optical fiber than a traditional data center. Data shows that global data center fiber consumption reached 69.6 million fiber-kilometers in 2025, and is expected to exceed 100 million fiber-kilometers in 2026.
Upgraded demand structure: AI data centers require large volumes of high-performance specialty fibers such as G.657.A2, multimode fiber, and G.654.E to meet low-latency, high-bandwidth interconnection requirements for GPU clusters.
Soaring share of AI demand: AI-driven fiber demand is projected to rise from less than 5% of global total demand in 2024 to about 35% by 2027.
New Frontier: Drone Applications – Military consumption is exceptionally high. For example, the widespread use of fiber-optic guided drones in the Russia-Ukraine war has greatly boosted demand. After losing domestic production capacity, Russia's share of global fiber consumption jumped from less than 1% to 10.5%, relying entirely on imports from China. This has made Russia one of the fastest-growing emerging markets for Chinese fiber exports.
Global Telecom Upgrades Provide a Solid Base – Ongoing 5G network expansion and national projects like China's "East Data, West Computing" initiative also provide a large and stable base demand. In 2025 alone, the "East Data, West Computing" backbone construction drove procurement of over 3 million fiber-kilometers of G.654.E specialty fiber.
Supply Side: Hard Bottlenecks That Are Difficult to Overcome
The explosive demand-side growth is met by the most rigid supply-side constraints.Core Bottleneck: Optical Fiber Preform – About 70% of the profit and the core technological barrier in the fiber industry chain are concentrated in the upstream optical fiber preform. Globally, only a handful of companies can produce it at scale.
Long Capacity Expansion Cycle – Building a new preform plant requires huge investment, complex technology, and a long lead time of 1.5 to 2 years from planning to actual output. This means that even if manufacturers start expanding capacity today, new supply will not hit the market until 2027 or later.
Capacity Crowding-Out Effect – As high-margin specialty fiber demand surges, preform manufacturers prioritize their limited capacity for premium products, directly squeezing the supply of traditional fibers like G.652.D, making even standard fiber tight.
Rational Industry Mindset – After experiencing the boom of 2016-2018 followed by severe overcapacity and price crashes, major industry players are highly cautious about large-scale expansion, further limiting short-term supply increases.
Geopolitical and Trade Factors
Against the backdrop of tight global supply-demand fundamentals, trade policies have also played a role.US-China Trade Frictions – Since September 2025, China has imposed anti-dumping duties of up to 78.2% on certain specialty fibers from the United States, affecting market supply patterns.
Regional Conflicts – As mentioned, the Russia-Ukraine conflict directly created a major new demand market for drones, further exacerbating global supply-demand imbalances.
Summary and Outlook
In summary, the current fiber price surge is the result of a structural shift in demand combined with historical supply constraints – it is not a short-term phenomenon. Institutions forecast that fiber prices will remain high or even continue to rise in 2026-2027, with the global supply-demand gap expected to widen to about 15% during this period.Leave a Reply
Your email address will not be published.Required fields are marked. *