Japan has earmarked JPY40 billion ($252.55 million) in its FY2025 supplementary budget to pull submarine cable landing points away from two heavily concentrated coastal zones, with SoftBank, IPS Corporation, IPS Pro and Shikoku Electric Power named as the first subsidy recipients.

The Ministry of Internal Affairs and Communications (MIC) selected the four companies after a competitive application window that ran from June 5 to July 6, 2026. The individual award amounts remain undisclosed. The money flows from the "Digital Infrastructure Strengthening Project through Regional Distribution of Submarine Cables," funded through Japan's Digital Infrastructure Development Fund and administered by the Communications and Information Network Association of Japan (CIAJ).

Rather than building state-owned networks, Japan is channeling subsidies directly to private telecom companies to persuade them to place critical facilities in regional hubs. The fund has grown steadily through successive supplementary budgets covering data centers as well as submarine cables, and now totals JPY132.5 billion ($1.97 billion) in cumulative allocations, including JPY50 billion ($315.68 million) in FY2021 and JPY30 billion ($189.41 million) in FY2023.

Why is geographic concentration a problem?

More than 80% of Japan's data centers and nearly all of its major international cable landing stations sit in just two areas: Chiba Prefecture, serving Tokyo and eastern Japan, and Mie Prefecture, serving Osaka and western Japan. The physical logic of the industry explains why.

"Submarine cable operators typically seek the shortest possible route to minimize latency. Practical considerations such as avoiding undersea volcanoes or fault lines and selecting suitable landing sites result in limited cable routes and concentrations of landing points in narrow areas," wrote Dr. Motohiro Tsuchiya, professor at Keio University's Graduate School of Media and Governance and adjunct fellow at the Japan Institute of International Affairs, in a recent article on the institute's website. Tsuchiya served on the MIC's nine-member study group on the protection of international submarine cables.

"As concentration increases vulnerability, Japan must diversify both cable routes and landing points to reduce risks from terrorism, missile strikes, or other forms of attack," he added.

The MIC's project aims to dismantle that concentration so Japan stays digitally connected if its traditional hubs are hit by natural disasters, cyberattacks or geopolitical conflict.

What will the four companies build?

The subsidies will establish three new carrier-grade landing corridors across northern, central and western Japan:

• SoftBank will construct a cable landing station (CLS) in Tomakomai City, Hokkaido, to support its AI data center campus there, drawing on Hokkaido's renewable energy and cooler climate.
• IPS Corporation will deploy an offshore marine branch line and branching unit off the coast of Wakayama City, connecting the international Candle Subsea Cable System to the southern Kansai coastline.
• IPS Pro will build a carrier-neutral, open-access CLS in Wakayama City, offering an alternative route to Osaka that bypasses Mie/Shima.
• Shikoku Electric Power will develop a CLS, offshore branch line and branching unit in Anan City and off Tokushima Prefecture, forming the "Shikoku Digital Gateway" — the first landing of international optical fiber pairs on the island of Shikoku, backed by the utility's baseload grid.

Where do the cable ships fit in?

The route-diversification effort runs in parallel with a second initiative aligned to a newly approved draft framework for strengthening international submarine infrastructure. The MIC has requested JPY100 billion ($631 million) in the FY2027 budget to subsidize the purchase and upgrading of domestic cable-laying and repair ships.

The need is stark. Japan operates only five cable-laying ships of 5,000 tons or more — three owned by an NTT Group company and two by a KDDI Group subsidiary. With a typical lifespan of about 40 years, some vessels are already past 30 and deteriorating.

NEC Corp., which holds roughly 20% of the global undersea cable manufacturing market, owns no cable-laying fleet and has leased vessels from overseas companies. The proposed subsidy would cover up to 50% of procurement costs for local buyers. New state-of-the-art cable ships cost an estimated JPY40 billion to JPY50 billion each, and the government aims to support the acquisition of three to five vessels.

How did the law change?

Japan's attention to cable security sharpened after suspicious cable breaks off Taiwan and in the Baltic Sea in 2024, and has intensified alongside territorial tensions between China and its neighbors in the South China Sea.

In June, the Japanese parliament passed significant amendments to the Economic Security Promotion Act. The 2022 version of the law had classified submarine cables only vaguely as "important private-sector technologies" with minimal policy support. The revised Act explicitly elevates international submarine cables, along with satellites and rockets, to "specified critical materials" and core critical infrastructure.

The amended law also expands the remit of the government-affiliated Japan Bank for International Cooperation (JBIC), which can now issue high-risk subordinated debt and invest directly in "designated overseas business projects." If a financial or geopolitical crisis strikes a critical overseas or regional cable project, JBIC can absorb the losses — shielding private Japanese telecom companies from bankruptcy and encouraging more aggressive network expansion.

With the FY2027 ship subsidy request pending and the first four regional landing projects now funded, Japan has set a two-track course it expects will keep its digital links intact through the decade.