Submarine cable-related stocks are attracting increasing attention on the back of government policy and the expansion of generative AI. A target of raising the global share to 35% by 2030 and the long-term trend in replacement demand have been highlighted, with the performance of major and small- and mid-cap stocks reviewed.
Reasons for the growing attention to submarine cable-related stocks include the sharp increase in international communications traffic driven by the spread of generative AI, replacement demand as existing cables reach the end of their service lives, and the government's designation of submarine cables as a policy priority from an economic security perspective. The Ministry of Internal Affairs and Communications has set a policy target of raising Japan's global share of the submarine cable market to 35% by 2030, with support measures including the purchase of cable-laying vessels, expanded production capacity and technology development. As a result, related companies are expected to see long-term growth in order opportunities.
NEC, Furukawa Electric, Sumitomo Electric Industries, KDDI and 湖北工業 are among the leading picks. Each plays a role in submarine cable manufacturing and installation, component supply or telecommunications operations. NEC is one of the major submarine cable companies, with higher sales and profit expected for the fiscal year ending March 2026 and its marine systems business targeting a return to profitability. Furukawa Electric is leveraging its submarine cable subsidiary and achieved substantial profit growth in its results. Sumitomo Electric is showing growth as one of the world's two leading suppliers of optical fiber for submarine cables, while KDDI is expanding its results on the strength of its stability as an operator that owns cable-laying vessels. 湖北工業 continues to hold the world's leading share of the optical isolator market and is expected to grow alongside expanding demand for submarine cables.
The 3 small- and mid-cap stocks identified are Seiko Giken, santec Holdings and Anritsu, with their roles in the supporting industries for optical components, optical monitoring and measuring instruments seen as important. Seiko Giken posted record-high profit in optical connector-related operations, santec Holdings is increasing profit as demand for optical components and measuring instruments recovers, and Anritsu is capturing data center demand as one of the world's leading suppliers of optical communications measurement equipment. These companies are expected to benefit as new submarine cables are installed and existing ones are replaced.