Han's Laser Invests $360M in Optical Fiber Preform Production to Strengthen AI Computing Infrastructure

Optical Fiber Preform Capacity Soars: Han’s Laser Bets ¥2.5 Billion on the “Physical Foundation” of the AI Computing Era

As the AI wave sweeps across the globe and demand for computing power explodes exponentially, the optical communications industry is undergoing a quiet yet profound paradigm shift—from serving as a mere “pipeline” for traditional telecom networks to becoming the “physical foundation of computing power,” enabling ultra-high-speed interconnects within hyperscale data centers and intelligent upgrades of backbone networks. Han’s Laser’s recent announcement—planning an investment of up to ¥2.52 billion to build a facility in Zhangjiagang, Jiangsu Province, with annual production capacity of 60 million core-kilometers of optical fiber and preforms—is far more than a routine capacity expansion. It represents a strategic positioning by China’s optical communications industrial chain amid dual coordinates: national strategy and global technological competition.

“East Data, West Compute” + Global AI Infrastructure: Structural Demand Accelerates the “Optical Replaces Copper” Transition

This project directly addresses two irreversible trends:
First, the deepening implementation of China’s national “East Data, West Compute” initiative is generating structural incremental demand. As the eight national computing-power hub nodes in central and western China enter large-scale construction phases, cross-regional data scheduling places ever-higher demands on backbone network bandwidth—making the evolution from 400G to 800G/1.6T inevitable. Per MIIT’s “14th Five-Year Plan for Information and Communications Industry Development,” by 2025, China’s backbone networks must widely adopt per-channel rates exceeding 800G. Achieving this hinges critically on stable, domestically produced high-precision, low-loss, large-diameter optical fiber preforms.
Second, global cloud providers’ capital expenditures are rebounding beyond expectations. Microsoft and Google both reported over 30% year-on-year growth in cloud revenue in Q1 2024; Amazon AWS announced plans to launch dozens of new hyperscale data centers this year. Internal (intra-DC) and inter-data-center (inter-DC) interconnects within these facilities rely heavily on high-speed optical modules based on silicon photonics or co-packaged optics (CPO) architectures. The performance ceiling of their core materials—G.652.D fiber or newer bend-insensitive variants—is ultimately determined by foundational preform manufacturing capabilities: material purity, precision in refractive-index profile control, and more. Han’s Laser’s move thus constitutes a critical link in the value chain—“computing-power surge → optical module upgrade → fiber material iteration.”

Technical Barriers: The Domestic Breakthrough from “Can Produce” to “Produce Optimally”

Notably, although optical fiber preforms sit upstream in the optical communications value chain, they entail exceptionally high technical barriers. Core challenges include nanoscale control of dopant (e.g., germanium, fluorine) concentration gradients during vapor-phase deposition (MCVD/OVD/VAD) processes; uniform stress management during high-temperature sintering; and geometric consistency assurance for preform rods exceeding 200 mm in diameter. Historically, the high-end preform market in China has long been dominated by international giants—including Corning, Sumitomo, and OFS—especially for products meeting stringent specifications required by 800G optical modules: ultra-low polarization-mode dispersion (PMD) and ultra-low attenuation (<0.17 dB/km @ 1550 nm). Domestic localization rates for such premium products remain below 30%. Leveraging its deep expertise in laser-based precision manufacturing and automated equipment, Han’s Laser explicitly emphasizes “independently developed VAD process platforms” and “end-to-end digital quality traceability systems” in this project—aiming to overcome bottlenecks in high-yield, high-consistency mass production. If Phase I’s ¥1.52 billion investment achieves customer certification and enters the supply chains of leading domestic optical module manufacturers by 2026, it will significantly shorten the domestic substitution cycle.

U.S.–China Tech Rivalry and Self-Reliance: From “Supply Chain Security” to “Standard-Setting Authority”

Against the backdrop of intensifying U.S.–China technological competition, achieving autonomy and controllability in optical communications infrastructure transcends mere capacity considerations. In 2023, the U.S. Department of Commerce added certain high-end photonic IC design tools to its export control list—highlighting the strategic urgency of self-reliance in upstream materials and equipment. Han’s Laser’s investment not only bolsters domestic preform production redundancy but also—through joint R&D mechanisms with leading Chinese optical module firms (e.g., Innolight, Accelink)—accelerates domestic adoption of next-generation fiber standards like G.654.E, optimized for ultra-long-haul transmission. This effectively amounts to competing for technological definition rights in next-generation optical networks. When Chinese enterprises secure technical authority across the full chain—from preforms to fiber to optical modules—the efficiency and security of “East Data, West Compute” data routing gain fundamental guarantees.

Valuation Logic Reset: Moving Beyond “Telecom Equipment Vendor” Toward “Computing-Power Infrastructure Operator”

Capital markets’ perception of the optical communications sector is undergoing a fundamental transformation. Historically, valuations were anchored to telecom operator procurement pricing and CAPEX cycles—rendering them highly cyclical. Today, their intrinsic value is shifting toward that of “AI computing-power infrastructure service providers.” Take Han’s Laser, for example: its optical fiber business is no longer merely an extension of its laser equipment operations—it positions the company as a core supplier at the physical layer of AI data centers. Benchmarking against U.S. peers (e.g., II-VI, Lumentum), valuation metrics have pivoted from traditional P/E ratios to PS (price-to-sales) and EV/Sales multiples—further enhanced by an “AI computing-power elasticity premium.” Should this project reach full capacity as planned, it is projected to generate annual revenue of approximately ¥3.5–4.0 billion, potentially triggering a systemic re-rating of the company’s overall valuation. However, short-term risks warrant caution: first, delays in customer certification—currently averaging 9–12 months industry-wide—could impede ramp-up timing; second, global optical fiber prices remain subdued and volatile, requiring careful economic evaluation of Phase II’s ¥1.0 billion investment.

Conclusion: A Single Fiber Carries More Than Just Data

Han’s Laser’s ¥2.5 billion commitment to optical fiber preforms appears, on the surface, to be a simple leap in production capacity. At its core, however, it signifies China’s effort to lay the physical bedrock of digital sovereignty in the AI era. When Microsoft Azure’s server clusters process millions of AI inference requests per second—and when data torrents surge unceasingly between “East Data, West Compute” hubs—the true enabler is not ethereal cloud algorithms, but rather every single optical fiber buried underground and spanning mountains and seas—and the underlying convergence of materials science, precision manufacturing, and systems integration embodied therein. This industrial upgrade, initiated at the preform stage, will ultimately redefine the very meaning of “new infrastructure”: no longer mere stacks of reinforced concrete, but silent yet immense “arteries of computing power”—woven from light and silicon.