YOFC (06869) shares plummeted 5.01% during intraday trading on Friday, extending a prolonged downtrend that has seen the stock price halved from its June highs, as mounting concerns over aggressive industry-wide capacity expansion weighed heavily on investor sentiment.

The sell-off was fueled by a wave of optical preform and specialty fiber capacity expansion plans announced by multiple industry players since the start of the year, including Hengtong Optic-Electric, FiberHome Telecommunication, Far East Smarter Energy, Tongding Interconnection, Hoshine Silicon Industry, and Han's Laser. Analysts at Credit Suisse warned that while AI and geopolitical conflicts are currently driving fiber optic demand and creating severe supply shortages in the US market, the significant capacity buildup in China and globally will gradually eliminate these shortages, putting YOFC at risk of losing market share with earnings potentially peaking cyclically in 2026 to 2027.

Adding to the downward pressure, Jefferies recently downgraded YOFC from Buy to Hold, citing projections that global fiber capacity could expand by 69% by 2028, with China's capacity potentially doubling. The brokerage cautioned that the supply increase would erode the current shortage and that earnings for the current period through next year may represent a cyclical peak. Meanwhile, southbound capital continued net selling in recent sessions, with profit-taking from elevated levels contributing to short-term pressure on the stock.