Summary of Key Points
Submarine fiber optic cables, often referred to as the "underwater highways" of the global digital economy, currently number 592 in existence, covering a total length of 1.5 million kilometers. Investments in this sector are expected to exceed $19 billion over the next five years, with Asia accounting for 22% of that amount. The main regions for cable deployment are Asia, Europe, and America. However, there are significant capacity gaps in certain directions (such as within Asia and between Eurasia and North America), and a large number of old cables are nearing the end of their useful life. With the growing demands from technologies like AI and emerging applications, the industry is facing opportunities for expansion and upgrading. China is actively making strategic moves in this area through planning, technological breakthroughs, and the establishment of submarine intelligent computing centers.
I. Current Global Situation of Submarine Fiber Optic Cables: Massive Existing Capacity, Future Investments Exceeding $19 Billion
By the end of 2025, there will be 592 submarine fiber optic cables in operation around the world, with a total length of over 1.5 million kilometers—this is enough to circle the Earth's equator 37 and a half times. The global investment in submarine cables over the next five years (2026-2030) is projected to exceed $19 billion, with Asia accounting for 22% of this figure. Geographically, the three regions of Asia, Europe, and America account for 80% of all land-connected cable systems and handle nearly all international data exchanges: Europe has the most cables (230), followed by Asia (160), and North America (the United States and Canada) with 100. These figures highlight the critical role of submarine cables as the backbone of global digital connectivity, which is expected to continue to expand.
II. Capacity Gaps and the Need for New Cables
A key concept here is "utilization capacity"—which refers to the proportion of a cable's total capacity that is actually in use. When this exceeds 30%, it indicates that the cable is under heavy load and needs to be replaced.
- Regions with High Capacity Gaps: Areas such as within Asia and between Europe and North America (the United States and Canada) have utilization capacities exceeding 50%, indicating a significant need for new cables.
- Regions with Sufficient Capacity: Regions like between Europe and sub-Saharan Africa, and between North America and Latin America, have utilization capacities of only 10%-30%, so there is no immediate urgency to build new cables.
At the same time, many old cables are scheduled for retirement: with a designed lifespan of 25 years, 63 cables (270,000 kilometers) will be retired between 2026-2030, and another 83 cables (200,000 kilometers) between 2031-2035. Asia and Europe are the main regions for cable retirement (accounting for over 50% of the total), further driving the demand for new cables.
III. Exploration of New Routes
To connect the world more efficiently and securely, the industry is exploring three new approaches:
1. Arctic Route: As Arctic ice melts, shorter routes become available, such as the one from Shanghai to New York, which can save transmission time and costs. Countries are therefore pushing for the development of submarine cables in this area.
2. Avoiding Risky Regions: Projects that bypass conflict-prone or unstable areas, such as those crossing the Caspian Sea, ensure the safety of data transmission.
3. Direct Cross-Ocean Routes: New routes that connect emerging markets directly, such as between Asia and Latin America, or between Africa and Oceania, to fill gaps in global connectivity.
IV. China's Active Engagement in Submarine Cable Development
China is taking multiple steps to strengthen its submarine cable infrastructure:
- National Planning: The 14th Five-Year Plan emphasizes the promotion of international cooperation in cable construction.
- Ministry of Industry and Information Technology Actions: Plans to expand the reach of international cables and develop core technologies for submarine fiber optics.
- Submarine Intelligent Computing Centers: China has established the world's first wind power-connected submarine data center in Lingang, Shanghai, and is developing GW-level submarine computing centers in Yangjiang, Guangdong, as well as another in Hainan. These centers rely on submarine cables for data transmission, thereby boosting the demand for such infrastructure.
- Hainan Free Trade Port: Accelerating the construction of cross-border submarine cables to foster the development of the digital economy.
V. Multiple Drivers Driving Growth in the Submarine Cable Industry
Several factors are driving growth in this industry:
1. AI Industry: The massive data demands of AI, especially for training large models, will significantly increase the demand for submarine cables.
2. Emerging Markets: The development of digital economies in regions like Asia, Latin America, and Africa will alter global traffic patterns and create new connectivity needs.
3. New Application Areas: Offshore oil and gas platforms, submarine scientific observation networks (e.g., monitoring ocean temperatures and earthquakes), and integrated communication systems (satellite + submarine cables) all require submarine cable support.
4. Replacement of Old Cables: The retirement of old cables will continuously generate demand for new ones.
These factors combined are creating a golden period for the expansion and upgrading of the global submarine cable industry.
In summary, submarine fiber optic cables are not an overlooked sector but are essential for the digital economy. With the growth in global digital demands, this industry is set to experience rapid development in the coming years, and China is actively positioning itself to take advantage of these opportunities.