First, market demand continues to grow
Fiber optic cable is the main carrier of information transmission, with the advantages of high transmission rate, large bandwidth, low loss, strong anti-interference and so on. With the development of the digital economy, the increasing demand for high-speed and large-capacity data transmission and storage has driven the expansion of the optical fiber and cable market.
In 2023, the scale of China's digital economy will reach 64.7 trillion yuan, accounting for more than 40% of GDP. The development of the digital economy cannot be separated from the support of new infrastructure, and the projects represented by 5G, data centers, and east and west computing in the new infrastructure require a large amount of optical fiber and cable.
5G is a new generation of mobile communication technology, with high speed, low delay, large connection and other characteristics, can support a variety of vertical industry application scenarios. According to the data of Shangpu Consulting Group, by the end of 2022, China has built more than 900,000 5G base stations, covering all prefecture-level cities in the country. It is expected that in 2023, China will continue to accelerate the construction and optimization of 5G networks, and promote the deep integration of 5G in the fields of industrial Internet, smart cities, and car networking. In 2023, China's 5G network construction will consume about 120 million core kilometers of optical fiber and cable.
Data centers are the core infrastructure of the digital economy and carriers of services such as the Internet, cloud computing and big data. With the development of artificial intelligence, Internet of Things and other technologies, data centers are facing the dual needs of scale expansion and performance improvement. According to the forecast of the China Academy of Information and Communications Technology, the total number of data center servers in China will reach 14 million units in 2023, an increase of 12.9%. Connections inside and outside the data center require the use of a large number of fiber optic cables and optical modules. In 2023, China's data centers will consume about 110 million core kilometers of optical fiber and cable.
East data West refers to the mass data generated in the eastern region is transmitted to the western region through high-speed network for storage and calculation processing, in order to solve the problems of land resources shortage and high power costs in the eastern region. The project is a key project of the national "14th Five-Year Plan" and an important measure for the construction of digital China. In 2023, the annual east-West project will consume about 80 million core kilometers of optical fiber and cable.
In addition to the above projects, optical fiber and cable are also widely used in home broadband, enterprise dedicated lines, government networks, education networks, medical networks and other fields to provide high-speed and reliable information services for all walks of life. In 2023, the total demand for optical fiber and cable in China will reach 460 million core kilometers, an increase of 9.1%.
On a global scale, the optical fiber and cable market is also showing a strong demand. Affected by the epidemic, the demand for remote working, online education, video entertainment and other applications has surged, promoting the upgrading of fixed broadband and mobile broadband. At the same time, governments have introduced policies to stimulate economic recovery, including increasing investment in digital infrastructure. In 2023, the annual global demand for optical fiber and cable will reach 650 million core kilometers, an increase of 7.8%.
Second, the pattern of industrial competition is stable and changing
China is the world's largest optical fiber and cable production and consumer, with a complete industrial chain and strong technical strength. After years of development, China's optical fiber and cable industry has formed a group of internationally competitive leading enterprises represented by Changfei, Hengtong, Zhongtian, Fiberhome, etc., and has also cultivated a group of specialized and characteristic small and medium-sized enterprises.
In 2022, the output of optical fiber and cable in China will reach 350 million core kilometers, accounting for 62.5% of the global output. Among them, the total output of Changfei, Hengtong, Zhongtian, Fiberhome four enterprises reached 170 million core kilometers, accounting for 48.6% of the national production, accounting for 30.4% of global production. These four companies are also ranked among the top four in the world.
From the perspective of market share, the concentration of China's optical fiber and cable market has declined in 2022. In 2022, the combined share of Changfei, Hengtong, Zhongtian and Fiberhome in the domestic market was 54.3%, down 10.7 percentage points from 2019. This is mainly due to the increase in domestic market demand since 2020 with the promotion of projects such as 5G construction and data center expansion, and some small and medium-sized enterprises have also seized the opportunity to expand production capacity and improve technology levels, thereby increasing market share.
From the perspective of profitability, the overall profitability of China's optical fiber and cable industry has increased in 2022. In 2022, 14 listed companies with optical fiber and cable as their main business achieved a total revenue of 102 billion yuan, an increase of 17.6%; Net profit totaled 6.2 billion yuan, up 2.8% year on year. Among them, Changfei, Hengtong, Zhongtian three enterprises to achieve a total net profit of 5.2 billion yuan, accounting for 83.9%.
From the perspective of technological innovation, in 2022, China's optical fiber and cable industry has made a series of important breakthroughs in the fields of new optical fibers, high-speed optical modules, and special optical cables. For example, Changfei successfully developed the world's first ultra-low loss optical fiber, the loss coefficient is only 0.1419dB/km, a new international record; Hengtong released 800G optical module, achieving a single wave transmission rate of 800Gbps, ahead of international peers; Zhongtian Technology developed the world's first submarine optical cable with independent intellectual property rights, breaking the foreign monopoly; Fiberhome has launched the world's first 400G QSFP-DD DR4 optical module based on silicon optical integration technology, achieving the goal of high speed, high integration and low power consumption.
In the international market, China's optical fiber and cable companies are also actively expanding overseas business and enhancing brand influence. In 2022, China's optical fiber and cable exports reached 130 million core kilometers, an increase of 18.2%. Among them, the export volume of Changfei, Hengtong and Zhongtian three enterprises reached a total of 90 million core kilometers, accounting for 69.2%. These three companies are also ranked among the top three in the world.
In addition to export products, China's optical fiber and cable companies have also accelerated the layout of overseas production capacity and built localized supply and service capabilities. For example, Changfei has established production bases in Indonesia, South Africa, Brazil and other countries, and has set up sales and service organizations in the United States, Europe and other places. Hengtong has established production bases in Thailand, India, Malaysia and other countries, and has set up sales and service agencies in the United States, Europe, the Middle East and other places. Zhongtian Technology has established production bases in Indonesia, Malaysia and other countries, and has set up sales and service organizations in the United States, Europe and other places.
The improvement of overseas production capacity layout is conducive to better meeting customer needs, improving market competitiveness and anti-risk ability, and is also conducive to releasing more production capacity in the tight supply environment of the domestic market, and achieving balanced development of domestic and foreign business.
Third, the trend of technological innovation is obvious
The optical fiber and cable industry is a technology-intensive industry, and technological innovation is the core driving force for the development of the industry. With the development of the digital economy and the advancement of new infrastructure, the performance requirements for optical fiber and cable continue to improve, which has promoted the acceleration of technological innovation in the industry. From a global perspective, the technological innovation trend of the optical fiber and cable industry is mainly reflected in the following aspects:
Large volume. With the explosive growth of data traffic, traditional single-mode fiber has been difficult to meet the needs of high-speed and large-capacity data transmission. Therefore, multi-core fiber, hollow core fiber and other new large-capacity fiber gradually attracted attention. Multi-core fiber refers to the integration of multiple transmission cores in the same fiber, which can realize the doubling of the transmission capacity of a single fiber. Hollow core fiber refers to the use of air or other gases as the transmission medium of the fiber, can achieve lower losses and higher rates. At present, these two types of fiber are still in the laboratory stage, but there are already some companies and institutions in the relevant research and development and testing.
Low loss. The loss coefficient of optical fiber is an important index to measure the performance of optical fiber, which affects the transmission distance and signal quality of optical fiber. With the complexity and distribution of the network, the requirement of low loss of optical fiber is getting higher and higher. Therefore, reducing the loss coefficient of optical fiber is an important direction of technological innovation in the industry. At present, the world's lowest optical fiber loss coefficient is 0.1419dB/km, developed by China's Changfei Company. In the future, with the progress of material technology, preparation process, detection methods, etc., the loss coefficient of optical fiber is expected to be further reduced.
High speed. With the development of 5G, data center and other applications, the speed requirements for optical modules continue to increase. At present, 400G optical modules have become the mainstream of the market, and 800G optical modules have also appeared. In the future, with the development of silicon optical integration technology, tunable laser technology, and high order modulation technology, higher rate optical modules are expected to be realized.
Specialization. With the wide application of optical fiber and cable in various fields, the special performance requirements of optical fiber and cable are constantly proposed. For example, in the fields of undersea communications, aerospace, medical devices, etc., special optical fiber cables with high strength, high reliability, high sensitivity, and high anti-interference characteristics need to be used. At present, China has made some breakthroughs in the field of special optical fiber and cable, such as dynamic optical cables developed by Fiberhome Communications and submarine optical cables developed by Zhongtian Technology. In the future, with the increase of market demand and the improvement of technical level, special optical fiber and cable will have greater space for development.
Fourth, there are broad prospects for development
In summary, in 2023, China's optical fiber and cable industry will maintain a steady growth trend, market demand will continue to expand, the industrial competition pattern will be stable and change, and the trend of technological innovation will be obvious. According to Shangpu Consulting Group data show that in 2023, China's optical fiber and cable market is expected to reach 456 billion yuan, an increase of 9.2%.
Shang Pu consulting believes that in the future, China's optical fiber and cable industry is facing huge development opportunities and challenges. On the one hand, policies such as digital economy and new infrastructure will bring continuous demand to the industry, and overseas markets will also provide a broader space for the industry. On the other hand, the industry also needs to continuously strengthen technological innovation and brand building, improve product quality and service level, and enhance core competitiveness and anti-risk ability.
To this end, Shangpu consulting suggests that China's optical fiber and cable enterprises should seize the opportunities, meet the challenges, and do the following work:
We will increase investment in research and development and improve technology. The optical fiber and cable industry is a technology-intensive industry, and technological innovation is the core driving force for the development of the industry. China's optical fiber and cable enterprises should increase research and development investment in new optical fibers, high-speed optical modules, special optical cables and other fields, enhance independent innovation capabilities, master core technologies, form their own intellectual property rights, and improve product added value and market competitiveness.
Strengthen brand building and improve service level. Fiber optic cable industry is a brand sensitive industry, brand building is an important support for the development of the industry. China's optical fiber and cable enterprises should strengthen brand publicity and promotion, enhance brand awareness and reputation, establish a good corporate image, and enhance customer trust and loyalty. At the same time, it is also necessary to strengthen the service capacity and level, provide high-quality pre-sale, sale and after-sales service, meet the personalized needs of customers, and improve customer satisfaction and stickiness.
Expand overseas markets and enhance international influence. The optical fiber and cable industry is a global industry, and overseas markets are an important direction for the development of the industry. China's optical fiber and cable enterprises should actively expand overseas markets, take advantage of national strategies and policies such as the "Belt and Road", strengthen cooperation with countries and regions along the route, participate in the construction and operation of local communications infrastructure, and provide high-quality products and services. At the same time, it is also necessary to accelerate the layout of overseas production capacity, build local supply and service capabilities, reduce operating costs and risks, and enhance international influence.
Strengthen industry cooperation and improve the overall level of the industry. The optical fiber and cable industry is an industrial chain collaborative industry, and industry cooperation is an important guarantee for the development of the industry. China's optical fiber and cable enterprises should strengthen cooperation with upstream and downstream enterprises, peer enterprises, scientific research institutions, etc., to form an integrated innovation system, share resources, information, technology, market, etc., to achieve complementary advantages and win-win development. At the same time, it is also necessary to strengthen exchanges and cooperation with international counterparts, participate in the formulation and review of international standards, and promote China's fiber optic cable technology and products to the world.
