Lumen Technologies, a fiber optic company $LUMN.US$ Pre-market trading on Wednesday saw another almost 50% increase in the stock price of over 90% growth in market cap, crossing the $5 billion mark. The stock price has tripled since the beginning of the year.

The company announced that it received $5 billion in new business due to the surge in demand for optical communication products.

The company stated that in order to meet this huge demand, Lumen will increase its intercity network mileage by more than double in the next five years and provide a large number of pre-installed dark fibers. At the same time, Lumen has partnered with Corning. $GLW.US$to become their preferred partner for the next generation of fiber optic dense cables, which will help to meet the growing need for data processing in optical communication.

In addition, the company also stated that due to the huge demand for AI, the company is actively negotiating with customers and is expected to obtain an additional $7 billion in sales opportunities for optical communication. Lumen explained that large companies in all industries are "seeking to quickly obtain fiber capacity, because due to the booming demand for optical communication, this resource is becoming more and more valuable and may be limited."

Telecommunications companies in North America, tied to AI giants

According to the data, Lumen Technologies is only second to AT&T.$T.US$Verizon$VZ.US$, with land and undersea fiber optic long-distance networks, about 450,000 miles of routed fiber optic cables worldwide, and connecting them to urban fiber optic networks, covering more than 60 countries and regions.

At the end of July, Lumen announced a partnership with Microsoft. The Microsoft side said that Lumen's Private Connectivity Fabric is a customized network, which includes dedicated access to existing fibers in Lumen's network, installation of new fibers on existing and new routes, and use of Lumen's new digital services. As data needs increase, this AI-supported infrastructure will enhance Microsoft by providing the network capacity, performance, stability and speed that customers need.$MSFT.US$In fact, at the Microsoft Ignite technology conference last year, Microsoft announced that it had deployed hollow-core fiber optic cables for data center connections in the United Kingdom, and is expected to gradually expand the applications of this technology. Hollow-core fibers are a new type of optical fiber for the next-generation network. Through air-guiding, they have the advantages of low latency, low nonlinearity, ultra-wide bandwidth, and large core diameters. They are expected to have wide applications in specific low-latency applications such as supercomputing, DCI, submarine cables, as well as sensing, high power transmission, special light sources, and other fields.

Data centers bring new growth points to the fiber optic industry.

Fiber optic cables, also known as optical fibers, are a transmission medium with a special structure and function that can transmit light beams to distant places and have become a core component of modern communication and various technical applications.

In recent years, the massive demand for communication construction in China has pushed the fiber optic cable industry to develop rapidly. China has not only become a major market for fiber optic cables but also the world's largest fiber optic cable manufacturer. The development and growth of the fiber optic cable industry has become an important support for our country's FT-TH, FTTA systems, triple-play access networks, and large-scale construction of 4G and 5G.

At the same time, with the rapid development of new industries such as optical communication and big data, many enterprises and cloud service providers are accelerating the new round of data center construction. The high requirements of data centers for network transmission speed and bandwidth directly promote the demand for equipment and fiber optic cables, bringing new growth points to the fiber optic industry. Changfei, the world's largest fiber optic manufacturer, has also stated that conventional optical fibers are difficult to meet the needs of the AI era, and one of the important reasons for researching and developing new types of optical fibers is AI.

According to Qianzhan Securities, the fiber optic industry chain of China's fiber optic industry has completeness and diversity characteristics, and has built a highly coordinated output system from upstream raw material refining and preparation, midstream fiber optic cable manufacturing, to downstream diverse applications. Among them, the upstream of the fiber optic sector mainly includes the preparation of silicon tetrachloride, tetrachloroethylene and preform rods for optical fibers, as well as the research and development and manufacture of fiber optic cable equipment. Among all upstream sectors, the quality of preform rods for optical fibers is particularly important. Its material is mainly high-purity quartz glass, and its purity, quality, and technical precision directly affect the transmission quality of optical fibers, such as tensile strength, effective refractive index, and attenuation.

The midstream is the processing and manufacturing link of fiber optic cables. After a precise process, the preform rod for optical fibers is stretched into optical fibers and then processed into optical cables through a series of processing technologies. The quality and performance of optical cables directly affect the stability and transmission efficiency of optical communication and are an important part of the entire industrial chain. The domestic leaders are mainly Changfei, Hengtong, Zhongtian, Fiberhome, and Foton, and these five companies occupy the vast majority of the optical fiber and cable ordering shares for the three major telecom operators.

The upstream of the fiber optic sector mainly includes the preparation of silicon tetrachloride, tetrachloroethylene, and preform rods for optical fibers, as well as the research and development and manufacture of fiber optic cable equipment. Among all upstream sectors, the quality of preform rods for optical fibers is particularly important. Its material is mainly high-purity quartz glass, and its purity, quality, and technical precision directly affect the transmission quality of optical fibers, such as tensile strength, effective refractive index, and attenuation.

The midstream is the processing and manufacturing link of fiber optic cables. After a precise process, the preform rod for optical fibers is stretched into optical fibers and then processed into optical cables through a series of processing technologies. The quality and performance of optical cables directly affect the stability and transmission efficiency of optical communication and are an important part of the entire industrial chain. The domestic leaders are mainly Changfei, Hengtong, Zhongtian, Fiberhome, and Foton, and these five companies occupy the vast majority of the optical fiber and cable ordering shares for the three major telecom operators.

In terms of profit distribution, the profit distribution from optical rods, optical fibers to optical cables is roughly 7:2:1, showing that the optical rod link is the most profitable part of the industry chain. In terms of product structure, the operating income for products worth 10-30 billion yuan respectively is 401/1288/60 million yuan.

Hollow core fiber: a new type of fiber for next-generation networks.

Unlike traditional fibers that use glass as the core for the light to transmit, the interior of hollow core fiber is hollow, and its structure is relatively special compared to traditional fibers. It does not depend on traditional light guiding mechanisms. Through a specific cladding structure and coating layer, light can be restricted to transmit in the air core, changing the transmission medium of light in fiber.

Haitong Securities pointed out that the speed of light in hollow core fiber is about 1.5 times that of solid ordinary single-mode fiber, close to the speed of light in a vacuum, reducing one-third of communication delay; the nonlinear coefficient of hollow core fiber can reduce 3-4 orders of magnitude compared with solid ordinary single-mode fiber, directly ironing out the nonlinear gap between optical fiber communication systems and classic Shannon limit, greatly improving the fiber capacity; the attenuation of hollow core fiber is less than the theoretical attenuation limit of solid ordinary single-mode fiber, which can overturn the limitation of the transmission distance of optical fiber communication.

GTJA stated that with the continuous growth of network transmission demands brought by the development of AI and other applications, the transmission capacity of contemporary fiber optic cable is gradually approaching the Shannon limit. The industry is also seeking the next generation of fiber optic cable to continue enhancing the transmission capacity. In addition to the already commercialized G.654.E ultra-low loss large effective area fiber, multi-core fiber, hollow core fiber, etc. gradually enter the industry's field of vision. Hollow core fiber has the advantages of low latency, low nonlinearity, ultra-wideband, and large core diameter. It has a wide range of applications in specific low-latency applications such as supercomputing, DCI, submarine cables, as well as sensing, high-power transmission, and special light sources.

In China, the research on hollow core fiber started slightly later than that of the international community, beginning in 2003. In 2018, a joint team from Beijing University of Technology reported a brand-new hollow-core anti-resonant optical fiber in the world, achieving the lowest transmission loss of 2dB/km in the 1512nm wavelength window.

In 2023, Shanghai University successfully broke through the tens of kilometers level of hollow core fiber preparation technology for the first time. As an important enterprise in the field of fiber optic cable, Changfei Company has been continuously researching and has achieved positive results in hollow-core fiber R&D for many years. Changfei Company is also one of the few enterprises in the world that can prepare kilometer-level hollow-core anti-resonant optical fiber. In addition,$Hengtong Optic-Electric.SH$In terms of design, it is also jointly researching relevant technical standards with Hengtong Optic-Electric and other units. Although the research time of hollow core fiber in China is relatively short, with the joint efforts of the academic and industrial fields, relevant technologies have made impressive progress and are expected to continue to break through in the future. $CHINA MOBILE.HK$Universities researchers have achieved impressive progress in the country's research into hollow core fiber since it started in 2003. The joint team from Beijing University of Technology reported a brand-new anti-resonant hollow-core optical fiber in the world, achieving the lowest transmission loss of 2dB/km in the 1512nm wavelength window. By 2023, Shanghai University successfully broke the10 kilometers level of hollow core fiber preparation technology. Changfei Company is one of the few enterprises in the world that can prepare kilometer-level hollow-core anti-resonant optical fiber.

Editor/Emily