Fujikura’s Capacity Crunch: Jefferies Sees Two Paths as AI Fiber Demand Outruns Supply

Jefferies models two scenarios for Fujikura: a normal path to higher earnings or a 25% stock drop to 4,000 yen if capacity constraints persist, amid AI-driven demand and helium shortages.

The tension between red-hot demand for optical fiber and Fujikura’s strained production lines has split the outlook for the Japanese manufacturer into two starkly different scenarios. Jefferies has responded with a probability-based model that flags a potential 25% downside to 4,000 yen if capacity constraints persist, but also sees a clear path to stronger earnings than the company itself projects.

At the heart of the uncertainty lies Fujikura’s medium-term target for the fiscal year ending April 2028: an operating profit of 315 billion yen. That figure landed 140 billion yen below the consensus analyst estimate of 455 billion yen when it was unveiled on May 19, sparking a sell-off that wiped out roughly 40% of the company’s market value — some 5.6 trillion yen. The stock closed Tuesday at 5,329 yen, down 3.98% on the day and well off its July record of 7,933 yen.

Jefferies assigns an 80% probability to what it calls the “normal” scenario, in which supply-chain bottlenecks gradually unwind. Under those conditions, it forecasts operating profit of 273.1 billion yen — substantially above both the company’s own guidance of 211 billion yen for the current year and a sign that the bank remains constructive on the long-term thesis. The remaining 20% probability goes to a conservative case in which capacity limits fail to ease, sending the stock toward the 4,000 yen level.

The production snags are not about a lack of orders. Fujikura’s Spider Web Ribbon and Wrapping Tube Cable products are in strong demand from data centres powering artificial-intelligence workloads. The bottlenecks lie deeper, in the supply of specialty gases such as hydrogen and helium, both critical to manufacturing high-grade optical fibre. Helium in particular is tight, exacerbated by geopolitical tensions and regional conflicts. New facilities do not offer quick relief because planning and construction in the fibre industry take years.

Fujikura is addressing the capacity gap with a 40 billion yen investment in a new plant at its Sakura Works site in Chiba Prefecture, dedicated to next-generation optical fibres. That facility, however, will not begin operations until December 2030. In the nearer term, the company is expanding its footprint in North America. It plans to launch a new subsidiary, Fujikura Optical Cable Systems LLC, in June 2026 as part of a broader 300 billion yen investment programme aimed at tripling fibre production in Japan and the United States over the coming years.

The strategic pivot is aligned with the AI-driven infrastructure build-out, but it does little to solve the immediate timing mismatch. Investors are paying a hefty premium for growth that will not translate into capacity for years. The stock trades at a forward price-to-earnings ratio of about 43, more than double the Topix average of roughly 18. That valuation is difficult to sustain when earnings momentum is hamstrung by supply constraints and long construction lead times.

Technically, the near-term picture remains weak. Moving averages point to continued pressure as the market awaits clear evidence that data-centre projects are accelerating and that raw-material supplies are stabilising. Until Fujikura can demonstrate tangible progress on those fronts, the powerful AI-driven demand story will remain overshadowed by capacity anxiety. The past week’s crash has also weighed on other Japanese tech stocks exposed to the AI theme, underscoring how quickly risk perceptions can shift in high-growth sectors when manufacturing realities fall short of market expectations.