NEC Exits 4G and 5G Base Station Market Amid Global Competition

Japanese telecommunications giant NEC has officially announced its decision to cease the development of 4G and 5G radio access base stations, marking a significant shift in the competitive telecom landscape. This decision comes as no surprise given NEC’s persistent struggle to compete with market leaders Huawei, Ericsson, Nokia, ZTE, and Samsung. Together, these five vendors dominate the global base station market, collectively holding approximately 80% of the worldwide share, leaving minimal space for smaller players like NEC and Fujitsu. Despite efforts to establish a foothold, NEC and Fujitsu together accounted for just 1.5% of the global market—barely a fraction of the scale necessary to remain viable in this highly competitive industry.

Why NEC’s Exit Signals a Structural Challenge

The decision to step back from the 4G and 5G base station market highlights deeper structural issues within Japan’s mobile infrastructure ecosystem. Unlike telecom giants in China, Europe, or the US, Japan’s network vendors have struggled to achieve economies of scale in the capital-intensive radio access network (RAN) sector. This lack of scale has hurt their ability to compete on both cost and technological innovation. NEC’s persistent losses in this segment made it increasingly clear that sustained competition with larger, well-funded rivals was untenable in the long run.

Fujitsu, another prominent Japanese telecom company, has also restructured its communications business by spinning it into a dedicated subsidiary earlier this year. Meanwhile, other domestic players like Kyocera have altogether abandoned plans to enter the 5G market, citing similar challenges with scalability and cost competitiveness. Even Japan’s largest mobile operator, NTT DoCoMo, which previously championed local vendors like NEC and Fujitsu, has started sourcing equipment from global giants such as Ericsson and Nokia to remain competitive in a rapidly evolving market.

Japan’s Future Focus: 6G and Beyond

Despite pulling out of the 4G and 5G base station market, NEC remains committed to the future of mobile networks. The company plans to channel its resources into research and development for 6G and “Beyond 5G” systems, aligning with Japan’s national strategy for next-generation technologies. NEC’s focus will include cutting-edge advancements in open and virtualized RAN (v-RAN), AI-driven network optimization, and integrated terrestrial-non-terrestrial networks—key components envisioned to power 6G infrastructure.

However, Japan faces significant hurdles in its 6G ambitions. The country’s relatively small 5G deployment leaves it at a disadvantage in testing dense, high-frequency network systems essential for future 6G architectures. Additionally, Japan only accounts for about 10% of global 6G-related patent filings, falling behind major competitors like China and the US. While national policy strategies and international collaborations, such as the Global Coalition on Telecommunications (GCOT), aim to promote innovation and counterbalance geopolitical forces, industry experts question whether such efforts can truly bridge the gap without the commercial scale necessary to support these ambitious goals.

The Global Telecom Landscape and Japan’s Role

Japan’s declining competitiveness in the base station market underscores the challenges faced by smaller ecosystems in a heavily globalized industry. The alliances formed through GCOT, which include nations like the US, the UK, Canada, and Australia, exemplify attempts to build partnerships outside of China’s growing influence. However, such geopolitical bloc arrangements risk fragmenting the global telecom market. This fragmentation could inflate costs, hinder interoperability, and slow down the rollout of next-generation networks, further disadvantaging Japan’s ability to compete globally.

Ultimately, NEC’s shift away from 4G and 5G could serve as a cautionary tale for countries aiming to independently sustain telecom equipment industries in the absence of strong domestic or regional market demand. While Japan continues to prioritize long-term innovation in 6G and beyond, its lack of recent investments in large-scale commercial infrastructure may limit its ability to remain a key player in the era of next-generation mobile networks.