Story
Sumitomo Electric Stock Jumps 6% on Meta Transatlantic Cable Deal
Summary
Shares of the Japanese cable maker hit a three-week high after it announced a partnership with Meta and NEC to supply advanced optical fiber for a new high-capacity subsea cable linking the U.S. and France.
Sumitomo Electric Industries shares surged after the company announced a partnership with Meta Platforms and NEC Corp. to build a next-generation transoceanic submarine cable, signaling strong investor confidence in the growing demand for high-capacity data infrastructure.
Market Reaction
In Thursday trading in Tokyo, shares of Sumitomo Electric (TYO:5802) climbed 6.1% to 2,207 yen, their highest level since September 1. The stock of its partner, NEC (TYO:6701), also gained 1.14% to 4,867 yen.
The investor response came in the first full trading session after the collaboration was announced on September 22, as Japanese markets were subsequently closed for a holiday. The broader Nikkei 225 index was up 1.3% at midday, with electronic-equipment stocks among the leading sectors, according to market data.
A Petabit-Class Partnership
The agreement involves the construction of "Petal," a new submarine cable system designed to meet the escalating data demands of artificial intelligence and other technologies. The companies described it as the world's first commercial petabit-class transoceanic system.
Key details of the project include:
Ad- Route: A roughly 7,000-kilometer cable connecting the United States and France.
- Capacity: Designed to deliver a transmission capacity of about 1 petabit per second, approximately double that of the partners' earlier Anjana system.
- Technology: The system will use 48 spatial channel pairs, utilizing Sumitomo Electric's advanced 2C Z-PLUS Fiber ULL multicore fiber.
- Timeline: The cable is scheduled to begin operations in 2029.
Under the terms of the partnership, Meta will fund and operate the cable, while NEC will manage the overall system design and construction. Sumitomo Electric will supply the core optical fiber technology.
Strategic Context
The project underscores the aggressive expansion of global subsea infrastructure by major technology firms to support soaring data traffic. According to Data Center Dynamics, Meta has invested in more than 20 subsea cable projects to bolster its global network.
This new system aims to significantly increase data capacity while limiting the need for additional power and physical infrastructure, addressing a key challenge in the data center and telecommunications industries. The collaboration leverages NEC's investments in subsea network technology and Sumitomo Electric's leadership in advanced optical fiber.
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