Huawei Enters the Constellation Game?
Plus Gravity-1 Debuts 🚀 Top 1️⃣0️⃣0️⃣ Space companies in China, and Incentives from Chengdu
Dear Readers,
Happy February, and an early happy spring festival for those who celebrate. As someone born in the year of the 🐲, this is apparently my year, so shout-out for any readers born in most of calendar years 2000, 1988, 1976, 1964, and maybe even 1952 and 1940! January saw the usual pre-new year rush in the Chinese space sector, with a bunch of funding rounds, launches, and other announcements. Before getting into the potpourri section of the newsletter, though, let’s dig into a recent announcement from Huawei, and the role of big tech in the Chinese space sector more broadly.
Huawei’s Big Move into Satellite
The past couple of months have seen Chinese tech giant Huawei jump into the satellite communications sector in several tangible ways, and January saw arguably the biggest announcement with admittedly vague plans for an optical comms constellation hitting the Chinese news wires.
Tech in Space
In general, large US tech companies are active in the space sector, even if tangentially. Arguably SpaceX/Starlink is all part of the larger MuskCo tech megacorp. Kuiper and Blue Origin, while far behind SpaceX/Starlink, have big ambitions, primarily funded by Jeff Bezos/Amazon. Google has at times been involved in HAPS, as well as constellation routing algorithms (Aalyria), and Microsoft has worked to integrate its Azure cloud service with satellite communications networks.
Big tech in China, on the other hand, has been a lot less active in investing into or interacting with the space sector, with a handful of tech companies getting involved in indirect or very preliminary ways, but with the general absence of big tech in China’s commercial space sector, at least in a meaningful way. With a couple of recent announcements, Huawei may be about to change all of that, but first, let’s review Chinese big tech’s space involvement to now.
Chinese Big Tech in Space
For the purposes of this article, “Chinese big tech” refers to the largely private commercial Chinese big tech companies, including but not limited to Tencent, Alibaba, Baidu, Xiaomi, Meituan, JD, and others. It does not include state-owned big tech companies (China Electronic and Technology Corporation), which are, by nature of being state-owned, very actively involved in space.
Among Chinese Big Tech, the leading company in terms of space activity is arguably Xiaomi, and even this has been indirect via Shunwei Capital, the VC fund of Lei Jun, Xiaomi CEO. Shunwei has invested in several of China’s leading space companies, including Galaxy Space, iSpace, and Deep Blue Aerospace, but beyond that has not seen any strategic alignment with any of them, even if there could be low-ish-hanging fruit (e.g. Xiaomi smartphones and other connected devices being integrated with Galaxy Space satellites).
Other than Xiaomi, we’ve seen Tencent, Alibaba, and Baidu get involved in China’s space sector as a partner/customer, primarily as a data integrator (i.e. partnering with EO data companies), and have seen Tencent invest in at least one non-Chinese space company (Satellogic), but have not seen anything meaningful from any of these three. Meituan and JD are even less involved with space than Baidu, Alibaba, or Tencent.
Overall, not a lot of involvement. There are probably a lot of reasons for this, but among others, I suspect a few:
Limited addressable market that’s extremely close to government, which in a Chinese context typically spells “more trouble than it’s worth”
Limited overlap with existing or future businesses
Crackdown on Chinese big tech companies over the last ~3 years has likely not helped in terms of emboldening tech companies to invest in sensitive, frontier technologies and industries
Which brings us to Huawei
Huawei’s is getting into the space sector in multiple ways as the right company in the right place at the right time. Huawei is uniquely positioned as one of China’s leading mobile phone manufacturers, and also leading network manufacturers. Huawei is the only company with direct exposure on both the networks side of the equation, and the user side of the equation. Using a couple of satcom industry buzz phrases, Huawei has one foot in direct-to-device and could have another foot in satellite-connected 4G/5G backhaul networks. And until recently, there hadn’t been too much activity from Huawei on either front, but this has begun to change.
The User Terminal (Phone) Segment
First, in September 2023, Huawei debuted the newest Mate60 Pro, with direct connectivity to the Tiantong-1 GEO satellite network, when using the China Telecom network. That is to say, an unmodified Mate60 Pro can send SMS data and make phone calls via satellite, which makes it even a bit more advanced than the capabilities that Globalstar brings to iPhones, namely emergency SMS. The Mate60 Pro is being offered with packages of ¥1,000 per year for 750mins/yr of domestic calling and 5 domestic SMS per year on the China Telecom network. The linked article above mentions some standard disclaimers, namely that users need unobstructed views of the night sky and that Tiantong cannot be used if the phone battery is below 5%, or if the temperature of the phone is too high, but overall it seems a very capable phone, powered by a highly capable domestically-designed chip.
This is a pretty important development in the broader Chinese mobile phone ecosystem, and in a world where everyone and their cousin knows a company trying to do satellite direct-to-phone communications, it makes it important in the context of China’s satcom sector too. With US/China relations continuing to be strained, Apple has faced political headwinds in the Middle Kingdom, and Huawei (among others) have made a push into the high-margin premium smartphone market segment, with some success. By making a big splash about a satellite-enabled high-end smartphone (image below), Huawei is positioning themselves front-and-center as a cutting-edge comprehensive tech company. And by offering real-life satellite-enabled mobile plans like the ones mentioned above, Huawei puts themselves on a path towards offering a vertically integrated consumer offering connected from space…if only they could build out the space segment.
The Space Segment
This takes us to the more recent announcement involving Huawei’s dive into the space sector: an optical communications constellation to be deployed by 2030. The announcement only hit the Chinese news wires en masse in January, though it comes from a talk given by Tang Xiaojun, Director of Tech Planning for Huawei’s Optical product line, at the Asia Communications and Photonics (ACP) conference in Wuhan in November 2023. During his talk, Tang introduced a concept for a fully optical global broadband constellation project (全光目标网) to be deployed by 2030. The constellation conceptualized by Tang would serve both consumers and B2B markets, and would consist of >10,000 satellites (“万级星座”). Tang refers to individual links of “10G —> 100G+”, though it is unclear whether this is referring to uplink or downlink, and also user or gateway links. In any case, the constellation is big and ambitious.
Tang’s presentation mentioned 4 main applications for the optical constellation: 1) a backbone network (全光调度骨干网), 2) a network connecting metropolitan areas (全光直达城域网), 3) a high-quality access network (高品量质入网), and 4) a smart home network (智慧家庭网络). Tang emphasized a high quality of service (0 interruptions, 0 lost packets), possibly indicating an emphasis on B2B/enterprise customers. The constellation could also clearly be used to connect future 6G (or even modified 5G) Huawei base stations, which are not only present all over China, but in dozens of countries around the world.
Why is Huawei announcing this constellation now? As mentioned above, they’re the right company at the right place at the right time. Huawei is the right company. They’re a juggernaut of a tech giant with revenues of >$100B per year, having just kind of blown past US sanctions and developed their own cutting-edge smartphone (and chip) with satellite capabilities, and China’s industrial base delivered for them, with SMIC building the chips and Chinas’s space sector having the assets on-orbit (Tiantong) to enable initial communications and collection of user data.
They’re in the right place, with their long-established critical role in the world’s telecoms network industry (above-mentioned 4G/5G base stations), and their more recent ascension in the mobile phone industry. They’ve been kicking the tires with space industry projects for awhile on both fronts, but with limited real commitment.
And perhaps most importantly, they’re playing in these markets at the right time. We’ve recently seen some degree of opening up by the Chinese government in telecoms, with MIIT publishing a draft for opinions of opening up the “information and communications” industry in October 2023, signalling potential willingness to open up the notoriously oligopolistic telecoms industry in China (three state-owned telcos with a combined >1.4 billion subs). We’ve also seen the government signal greater openness to large commercial broadband constellations, including G60 and Galaxy Space, which has complicated the picture in terms of “Chinese version of Starlink”. As a nominally commercial tech juggernaut with deep ties to the state and strong technological capabilities in networks and phones, why not Huawei?
What to Expect Moving Forward?
Perhaps the most interesting thing is that Huawei is already on the path to satellite network integration. Their Mate60 Pros in the field can use Tiantong, and while a tiny percentage of users are likely to do so, China Telecom has ~400M subs, so they’re probably getting some data now. On the satellite side, Huawei is likely meeting with China’s growing number of commercial satellite manufacturers and constellation operators trying to understand whether there could be opportunities for collaboration.
In the next few years, we may see Huawei launch a handful of their own satellites for testing, and might see announcements of collaboration between Huawei and satellite manufacturers. We are also likely to see an incremental improvement of satellite-enabled service quality on Huawei phones, and potential application testing between Huawei 4G/5G towers and existing on-orbit constellations (we may have seen such a test in November 2023 with Huawei and Galaxy Space, but the satellite operator wasn’t explicitly identified).
From a spectrum perspective, I speculate, but in theory a fully optical constellation would not need radio spectrum, so we would see nothing on the filing side as evidence of Huawei’s progress. With a timeline of 2030, clearly the company is pretty aspirational and measured about this project, but with so many tickets in the satellite internet lottery, Huawei seems destined to push further into technologies that integrate space-based communications with their ground-based terminals, whether today’s mobile phones or 2030’s 6G towers. For the time being, we will have to wait and see, but it’s clear that one of China’s tech giants is starting to take space seriously.
For more info on China’s laser comms, contact OGC about our China laser comms report
This month saw a host of other ongoings in the sector, including:
Orienspace debuted the Gravity-1 in a sea launch from Haiyang, Shandong Province. The rocket, which is the world’s largest solid-fueled rocket, sent 3 Yunyao Yuhang/CGSTL satellites into orbit. Orienspace has seen rapid progress since being established in January 2021, benefiting from buying mature technology from SOEs (the Gravity-1 is powered by 7x solid engines provided by AASPT, aka the CASC 4th Academy).
CGSTL completed another laser inter-satellite link test, this time using the Jilin-1 02A01 and Jilin-1 02A02 satellites. The test achieved speeds of 100 Gbps, an improvement of 10x over the company’s June 2023 test. The company’s remote sensing constellation is at this point so large (~150 satellites) and generating so much data that they are struggling with the bottleneck of how to downlink all the data efficiently. As a result, they have been focused on optical communications, a dynamic helped by their origins in the CAS Changchun Institute of Optics and Fine Mechanics.
An article on the “Top 100 Chinese Commercial Space Companies” (by valuation) was published by Taibo, a Chinese business intelligence company. The list includes a number of questionably commercial companies (e.g. partial CASC subsidiaries China SpaceSat and China Satcom), but nonetheless offered some really interesting nuggets. More on this later this month with collaborator
, but a few high-level takeaways:China Satcom is still worth >$10B, making them worth more than SES, Eutelsat, and ViaSat/Inmarsat, combined, and valuing them at a robust ~25x revenues. Wild.
7 launch companies, of which 5 are fairly commercial, are worth >$1B (Space Pioneer, Galactic Energy, iSpace, CAS Space, Landspace, Expace, and Zhongtian Rocket).
A few early leaders (OneSpace, Commsat) have struggled to keep pace with competitors, with OneSpace’s valuation at ~1/5th of Space Pioneer, and Commsat’s at ~1/4 of Galaxy Space.
A pair of ¥600M funding rounds, with launch company Orienspace announcing their B round just a few days after the launch of the Gravity-1 and Shanghai Gesi Satellite announcing an A round in December 2023 (we only just unearthed it this month!) Gesi is an effective JV between CAS SECM and the Shanghai Government, and is likely to be the prime manufacturer for the G60 constellation, which saw its first satellite roll off the production line in December last year.
CGWIC held a meeting with the “South African Economic Counsellor” Gary Smith, who visited the company’s HQ and spoke with, among others, CGWIC Chairman Hu Zhongmin and Deputy General Manager Su Jinxin to discuss collaboration between South Africa and China in various space industry verticals. This comes several months after South Africa signed onto the ILRS, the joint Sino-Russian lunar project.
Speculation continued to grow at the public absence of leaders from three major space industry SOEs. With news having broken at the very end of December about the removal of Wu Yansheng, Liu Shiquan and Wang Changqing from the 14th National Committee of the CPPCC, the three leaders have not been seen since. For context, Wu Yansheng is Chairman and Party Secretary of CASC, Liu Shiquan is Chairman of NORINCO and former Chairman and General Manager of CASIC, and Wang Changqing is Deputy General Manager of CASIC. While we are loathe to speculate, the public absence and lack of mention of these three figures by any official media, combined with their removal from the CPPCC, would seem to be a bad sign for them individually, and in the short-term, probably a bad sign for their companies.
The southwestern city of Chengdu issued supportive policies for satellite internet. While broad in scope, they are ultimately pretty limited in total value, with subsidies including things like ¥500,000 (~$70,000) for every satellite built in Chengdu, up to ¥5M per company, as well as various rebates and incentives for R&D expenditure. While ¥5M for launching satellites is surely not bad, it’s not a whole lot when it still costs some ¥60,000+ per kg just to launch the satellite, then a bunch more to build it. In any case, probably a welcome bonus for companies building satellites in Chengdu.
We came across a deep-dive article on talent transfer in the Chinese space sector, which includes interviews with Wang Yang (CEO of GeeSpace) and Huo Liang (Founder of Deep Blue Aerospace and former CTO of OneSpace). Among other things, the article provides a cool story about the early days of iSpace, including the obligatory founders living in their office and furnishing it with cheap furniture (no word on whether it was from IKEA).
Finally, China and Russia 🇨🇳 🇷🇺 jointly conducted a Quantum Key Distribution (QKD) test, using China’s Mozi Quantum Satellite launched in 2016. the Chinese side used the Nanshan optical ground station in Xinjiang, while the Russians used the Zvenigorod station near Moscow. The collaboration between Russia and China over satellite applications using Mozi began in 2020, according to an article from SCMP.
If you’ve made it this far, a big thanks for reading, and have a great rest of your week!
Best,
Blaine