Kyocera Exits 5G Basestation Market Amid Rising Costs and Limited Profitability

In a surprising yet sobering move, Japanese electronics giant Kyocera has officially withdrawn from the competitive 5G basestation market. The exit highlights ongoing challenges for companies trying to secure a foothold in a sector dominated by a few global players. According to a report by the Nikkei Asia Review, Kyocera’s decision was fueled by ballooning development costs and a bleak outlook for profitability. This shift further underscores Japan’s broader struggles to reclaim a leading position in the global communications industry, as heavyweights like Nokia, Ericsson, and Huawei continue to dominate.

Kyocera’s Initial Foray Into 5G Technology

Kyocera’s journey into 5G began in 2023 with a promising start. The company unveiled its first AI-driven 5G basestation in February 2025, powered by Nvidia Hopper chips. These basestations were designed to deliver enhanced performance while lowering energy consumption. Kyocera also launched the 5G O-RU Alliance, partnering with six other companies, including Taiwan-based Microelectronics Technology and Korea’s HFR. The alliance aimed to promote open RAN networks by offering interoperable and flexible solutions to expand 5G adoption globally.

Despite the technological promise, the 5G basestation market remains notoriously difficult to enter. Even established players like Samsung Networks have struggled to gain significant traction outside their home markets. For Kyocera, the financial and logistical hurdles proved insurmountable, with its modest annual R&D budget of $372 million dwarfed by industry leaders such as Huawei, which invests a massive $25 billion annually. As a result, Kyocera’s retreat from the sector did not come as a surprise to industry insiders.

Challenges in a Saturated Market

The global market for 5G equipment is tightly controlled by a handful of suppliers who face limited demand for new infrastructure investments. Telecom operators, still optimizing their existing networks, have shown little urgency to adopt open RAN solutions, despite the potential for improved flexibility. Japan’s own telecom leaders like NEC and Fujitsu have faced similar hurdles, struggling to compete internationally. Kyocera’s exit underscores these broader challenges and speaks to the difficulties smaller companies face in making a mark in a sector with high barriers to entry.

Kyocera’s shareholders, including activist fund Oasis Investments, had been pressuring the company to cut back on underperforming ventures, such as millimeter wave technologies. Despite some progress, Oasis expressed skepticism about Kyocera’s ability to implement meaningful change. Amid these pressures, the company reported mixed financial results for the first half of the fiscal year, with a slight decline in overall revenue but a marginal improvement in operating profit. However, its communications unit saw only a 1% higher operating profit, signaling that the division’s growth potential remains limited.

Future Prospects and Strategic Focus

Looking ahead, Kyocera plans to focus on its collaborative efforts with KDDI, Japan’s local telecom leader in which Kyocera holds a 15% stake. Together, the two companies have developed a mesh configuration aimed at tripling the millimeter wave coverage area. While this technology could offer niche benefits, investor confidence remains low, with calls for Kyocera to exit this segment entirely due to its limited profitability.

Kyocera’s move to halt 5G basestation development may position the company to better streamline its resources and address investor concerns. However, Japan’s dream of re-establishing a formidable presence in the global telecom equipment market seems farther away than ever. As companies like Huawei and Nokia continue to cement their dominance, Kyocera’s retreat serves as a reminder of the high stakes and enormous investment required to compete in this space.