NEC's Submarine Cable Business: One of Only Four Companies That Can Build the Internet's Undersea Backbone

For the full picture of submarine cables, see Your videos and meetings travel the bottom of the sea, not space; on how few companies can build them, see Only four companies in the world can build submarine cables. Where cables come ashore in Japan is covered in Japan's internet converges on just two places: Chiba and Mie, and the broader mechanics of communication in How the internet actually connects (in Japanese). Read together, they bring NEC's role into three-dimensional focus.

What kind of company is NEC?

NEC is a Japanese IT and network-infrastructure company spanning system development and operations (IT Services) through network equipment, submarine cables, and aerospace and defense (Social Infrastructure). For the fiscal year ended March 2025, consolidated revenue was 3,423.4 billion yen and adjusted operating profit was 287.1 billion yen (Nikkei XTECH).

To most people, NEC is a PC and systems company. This article focuses on one specific facet: submarine cables. NEC is one of only a handful of manufacturers worldwide that can build both the submarine cable itself — the fiber-optic cable connecting continents across the seabed — and the repeaters that re-amplify the attenuated optical signal every stretch of the route (in submarine systems these are called optical repeaters).

In other words, NEC is a "vertically deep" infrastructure company that builds and lays not just software and systems but the physical communication routes connecting Japan to the world. This article stays focused on that submarine-cable and communications-infrastructure axis.

How does NEC's revenue break down by segment?

NEC's business rests on two pillars: IT Services, covering system development and operations, and Social Infrastructure, covering network equipment, submarine cables, and aerospace and defense. Submarine cables belong to the Social Infrastructure segment. The segment figures for the fiscal year ended March 2025 are as follows.

(Nikkei XTECH)

What matters here is where submarine cables sit. They are one part of Social Infrastructure, and their revenue is a small fraction of a segment exceeding one trillion yen. For NEC, the submarine cable business matters not for its revenue scale but for its rarity — membership in the global big four — and its strategic value for economic security.

Viewing NEC as "a company that earns its money from submarine cables" therefore gets the proportions wrong. The earnings pillar is IT Services; submarine cables are best understood as a technologically and strategically rare asset.

Where do NEC's technical strengths lie?

NEC's technical strength lies in manufacturing the submarine cable wet plant — the complete set of equipment that goes into the sea — domestically, and handling laying and maintenance end to end.

The wet plant is the collective name for what sits on the seabed: the cable itself, the optical repeaters, and the branching units that split one cable toward multiple destinations partway along its route. The land-side communications equipment, by contrast, is called the dry plant. Within the NEC group, subsidiary OCC (Kitakyushu) manufactures the cable itself and NEC's Yamanashi operations build the optical repeaters. OCC is described as the only factory in Japan capable of building optical submarine cables that withstand the water pressure at a depth of 8,000 meters (Nikkei XTECH).

Simply running optical fiber through the sea cannot cover intercontinental distances. The optical signal attenuates over thousands of kilometers and must be repeatedly amplified by optical repeaters resting on the seabed. These repeaters must run for decades underwater without replacement, and the companies able to manufacture them are few worldwide. NEC is one of the rare makers that builds these repeaters in-house.

When a cable reaches shore, it is received at a landing station — the facility where a submarine cable connects to the terrestrial network. Because NEC covers everything from cable and repeater manufacturing through offshore laying to repairs when cables break, it can deliver a system from design through operation — the difference between NEC and companies that supply only part of the equipment.

What role does NEC play in the supply chain and infrastructure?

Within the infrastructure landscape, NEC's role is that of one of the few domestic manufacturers physically supporting Japan's international connectivity.

The vast majority of Japan's international communications traffic travels over submarine cables — the ocean floor, not satellites, is the protagonist. And the manufacturing and laying of the world's submarine cables is roughly 98% concentrated in four companies: France's ASN (Alcatel Submarine Networks), America's SubCom, China's HMN Technologies, and NEC. As one of this big four, NEC holds a particularly strong position in the Asia-Pacific region (METI Journal ONLINE, Ministry of Economy, Trade and Industry).

This four-company structure also matters for economic security. In May 2025, the Japanese government added submarine cables to the critical goods and technologies in its revised action plan for strengthening the industrial and technology base for economic security. Being able to build submarine cables domestically, without depending on foreign suppliers, carries strategic weight for protecting the nation's communications backbone.

So that communications do not stop when a single cable breaks, the basic practice in submarine systems — as elsewhere — is redundancy: running multiple cables over the same corridor so traffic can be rerouted. NEC keeps supplying the physical "blood vessels" of this redundant global network.

Traffic that comes ashore from the seabed ultimately flows onward to base stations — the radio equipment connecting smartphones to the network — and to data centers, the facilities that house servers and connect them to communication lines.

What are NEC's market position and competitive structure?

NEC holds over 20% of the global market for newly built submarine cables and competes with ASN, SubCom and HMN. A five-forces view of the competitive structure looks like this.

The biggest question is which of the big four captures the new-build demand driven by exploding AI traffic. As major cloud providers increasingly invest in their own submarine cables, NEC competes with ASN, SubCom and HMN on the strength of its rare ability to manufacture the wet plant end to end domestically — and its geopolitical standing as a trusted supplier.

What are NEC's weaknesses and risks?

The biggest weakness is that the submarine cable business is small relative to NEC as a whole. The earnings pillar is IT Services, and even the entire Social Infrastructure segment that houses submarine cables generates revenue of just over one trillion yen. However rare technologically and strategically, the business is not large enough to move company-wide results. The profitability of NEC's core IT/SI operations determines the fortunes of the company overall.

Second, lumpy orders. Each submarine cable is a giant project spanning thousands of kilometers, so revenue swings sharply with whether projects materialize. Missing a large project can shrink the business abruptly, while AI-driven growth in new builds is a tailwind. It is a different animal from a stable earnings base.

Third, geopolitical risk. Submarine cables are a focal point of economic security, and route selection and landing points hinge on political decisions in each country. The rise of China's HMN and moves to route cables around particular countries can skew where orders land geographically and raise costs. The marine systems business has also historically wrestled with profitability challenges.

What are NEC's recent moves?

Recently, NEC has been pressing offensive investments and completing major projects against the backdrop of AI-driven growth in new submarine cables.

In December 2024, NEC completed construction of the Asia Direct Cable (ADC), an optical submarine cable spanning roughly 10,000 km across Asia-Pacific, and handed it over to the consortium. It links Japan, China (Hong Kong and Guangdong), the Philippines, Singapore, Thailand and Vietnam, with transmission capacity exceeding 160 Tbps (terabits per second). It is the first new cable directly connecting Japan and Singapore in about eight years (NEC).

NEC is also strengthening an "all-domestic" setup that completes cable, repeaters and laying entirely in Japan, and has set a target of lifting its global share from over 20% today toward 40%. To that end it plans to invest more than 100 billion yen over five years, including a stated policy of owning its own cable-laying ship for the first time (Nikkei).

For NEC as a whole, fiscal 2025 (the year ending March 2026) delivered full-year revenue of 3,582.7 billion yen and adjusted operating profit of 386.8 billion yen, with the operating margin reaching double digits for the first time. While IT Services and aerospace and defense drive the results, submarine cables — small as they are — carry growing weight as a rare asset holding the trunk lines of communication in the AI era (Cloud Watch).

In the shadow of headline-grabbing AI chips and cloud platforms, NEC keeps laying physical communication routes across the ocean floor. In an era when AI is causing traffic to explode, the value of being one of the four companies that can build submarine cables domestically will only grow from here.

Key takeaways

• NEC is one of the four companies in the world (ASN, SubCom, HMN, NEC) that can build submarine cables; together they manufacture and lay about 98% of the world's submarine cables.
• NEC's consolidated revenue for the fiscal year ended March 2025 was 3,423.4 billion yen — IT Services 2,033.2 billion yen, Social Infrastructure 1,141.7 billion yen. Submarine cables sit within Social Infrastructure.
• Its technical strength is wet-plant manufacturing: the cable itself (subsidiary OCC, Kitakyushu) and optical repeaters (NEC Yamanashi) built in Japan, with laying and maintenance handled end to end.
• In the market it competes with ASN (the leader with about 34% of new builds), SubCom and HMN, with particular strength in Asia-Pacific — physically underpinning Japan's international connectivity and economic security.
• Risks are the small scale relative to the core IT business, lumpy orders and geopolitics. Riding AI demand, NEC plans to invest over 100 billion yen in five years and lift its global share toward 40%.