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AI Data Centers Spark Fibre Optic Boom
25 Oct
Summary
- Optical fibre demand is surging due to AI data centers.
- Two companies show massive profit jumps of 448% and rebound.
- Order books total ₹64,000 crore, ensuring future demand.
Artificial intelligence data centers are fueling an unprecedented demand for high-density optical fibre as network speeds accelerate and GPU clusters expand. This surge has led to a dramatic increase in fibre counts within switch racks, potentially reaching 16,000 per rack, a 32-fold increase over conventional setups.
Two companies, HFCL and Sterlite Technologies, are significantly benefiting from this trend. HFCL reported a 448% year-on-year profit jump to ₹394 crore in Q2FY27, while Sterlite Technologies saw its net profit rebound to ₹517 crore. Both companies have amassed substantial order books totaling ₹64,000 crore.
HFCL's order book stands at ₹28,911 crore, with 64% attributed to optical fibre cables and data centre interconnects, largely from global hyperscalers. The company is investing ₹1,800 crore in manufacturing expansion, including ₹1,250 crore for in-house preform production.
Sterlite Technologies boasts a record ₹35,274 crore order book, with a significant portion from multi-year agreements with global hyperscalers. Their Data Centre & Cloud segment aims to constitute 50-60% of revenue, supported by a net-debt-free balance sheet and planned annual capex of ₹1,000 crore.
While current demand is concentrated in the US, India is poised to become a major growth driver as data center projects scale up. Challenges include scaling production to meet hyperscaler needs and potential demand fluctuations if AI investments slow.
