"The presence of what appear to be sections of a submarine's pressure hull in the yards suggests construction of a new submarine, possibly the Sinpo-C ballistic missile submarine - the follow-on to the current Sinpo-class experimental ballistic missile submarine", 38 North said in a report on Thursday.
"The continued movement of parts and components into and out of the parts yards adjacent to the construction halls indicates an ongoing shipbuilding program".
North Korea has in recent years been investing heavily in the development of long-range ballistic missiles.
A senior Chinese envoy discussed regional concerns with officials in Pyongyang on Saturday, North Korean state media said, as the USA presses China to help ease the standoff over the North's nuclear weapons.
Pentagon chief spokeswoman Dana White, however, said that "it's perilous to predict anything about what North Korea does or doesn't do, but we're continuing to monitor the situation".
Using cyber weapons to disrupt missile launches is not an easy matter though as it requires substantial knowledge of missile building and launch control and guidance systems of a country like North Korea with its very limited use of the internet and few connections to the outside world, the newspaper wrote. It said the submarine was likely a larger successor to North Korea's single experimental ballistic missile submarine.
North Korea is also thought to be working on a solid-fuel missile for submarine launches.
"China is sending an envoy and delegation to North Korea - A big move, we'll see what happens!"
China meanwhile, has proposed that to start peace negotiations, North Korea could stop its nuclear and missile programs in exchange for the USA and South Korea stopping regular military drills in the region.
"We need it now".
In an interview with Reuters, Han Tae Song, North Korea's ambassador to the United Nations in Geneva, brushed off the new sanctions which the Trump administration has said it is preparing, as well as the possibility of North Korea being added to a USA list of states sponsoring terrorism.
"The DPRK, my country, will continue to build up its self-defence capability, the pivot of which is nuclear forces and capability for a triumphant. strike, as long as United States and hostile forces keep up (the) nuclear threat and blackmail", he said.