A grand chess game has been played, and Japanese companies have finally recognized the reality.

NEC President Takayuki Morita recently summed up the entire story: "In principle, we will no longer make development investments in this field." This once ambitious Japanese electronics company, which planned to enter the 5G base station market, has decided to withdraw from this battle.

**The Market Has Been Decided**

According to the latest report from Nikkei Asia, NEC will cease development of 4G and 5G communication standard wireless base stations and shift its focus to software. But don’t misunderstand—they are not completely giving up—maintenance and support services will continue, after all, some income is necessary.

Why did they reach this point? Data speaks best. According to Omdia market research, Huawei, Ericsson, and Nokia together control nearly 80% of the global base station market. And NEC and Fujitsu? Combined, they account for less than 2%. Just imagine how big the gap is.

**A Once Bold Gamble**

Let’s go back to June 2020. NEC and Japan Telecom (NTT) announced a capital partnership, with NTT investing about 64.4 billion yen to jointly develop 5G mobile communication systems. What was their ambition at the time? "Strive to reach a 20% global market share by 2030." Sounds quite inspiring.

The background was clear—this was part of Japan’s attempt to build an alliance to counter Huawei. The US was rallying allies to block Huawei, and Japan naturally wanted a piece of the pie.

But plans are no match for changing circumstances.

**The Reality Check**

NEC originally regarded the 5G base station business as a growth pillar for its five-year plan starting March 2022. But what happened? Capital investment by 5G telecom operators was far below expectations. Even more painfully, the 5G base station business became increasingly unprofitable.

Fujitsu saw through this and directly divested its communication-related business, including base stations, in July this year. Kyoei planned to enter the market by 2027 but gave up on 5G base station development altogether. Even NTT Docomo, Japan’s largest mobile operator, which last year prioritized procurement from NEC and Fujitsu, changed its tune by 2024, increasing purchases from overseas companies like Ericsson.

**Are There Still Moves?**

NEC has not completely given up. They stated they will continue developing equipment for defense and other uses, and push forward with 6G research and development. This is a backup plan—if 5G cannot turn around, at least they will have a foothold in the next-generation communication standards.

There’s also a major move behind the scenes. The global telecom alliance composed of Japan, Australia, Canada, the UK, and the US recently held a meeting in Japan to discuss AI and 6G communication standards, with the openly stated goal of "countering China’s influence in the global telecommunications field." The Western camp aims to promote Open RAN to build "secure telecom networks."

Looking back, this competition was lost from the start. When Huawei adopted a single-vendor model for efficient operation, Japanese companies were still fighting for market share. The current situation is simply the inevitable result that was long foreseen.