The Coming Chinese NGSO Gold Rush
Plus some stunning photos from Wuhan 📷, funding for on-orbit servicing 🛰️, and updates from the Two Sessions 🇨🇳
Dear Readers,
Cheers to the end of Q1, and a pause to recognize that quarters feel like years when the industry is moving at ten thousand miles per hour. We’ve made it folks.
A ton of updates this month, including a deeper look than we’ve ever seen at CASIC’s Wuhan satellite factory, money being put into on-orbit servicing companies with established shareholders, and some space references at China’s Two Sessions. But first, a deeper look at what is gearing up to be a Chinese NGSO broadband gold rush, with two billion dollar contenders emerging amidst growing government support and reforms.
China’s NGSO Broadband Ambitions: Precursor to a Gold Rush
We’ve covered China’s NGSO broadband constellation ambitions and the reasons behind them in some detail, including the Nov ‘23 monitor, which would be helpful background for this one. Since November, we’ve seen a handful of events that are creating a Chinese NGSO constellation gold rush. Before digging into these recent events and the companies set to benefit, a brief review of events up to Nov 2023.
China is planning a “Chinese version of Starlink”, notably the “Guowang” constellation (国网 likely being an abbreviated 国家网络 or “national network”), which calls for nearly 13,000 satellites. The project will be operated by China Satellite Networks Limited (China SatNet), a state-owned enterprise (SOE) with substantial financial and political support. This has been explicit state policy since 2020, and China SatNet was established in April 2021 with a registered capital of ¥10B (~$1.4B). Progress has been limited since then, but we are starting to see some green shoots on the ground (a huge new HQ for SatNet, for example), and a handful of satellites were likely launched last year (typically “LEO Broadband Internet Test Satellite” without a specified operator).
More recently, the government has pushed for more private investment into the NGSO broadband constellation game, which we discussed back in November. At that time, the Shanghai Government had written some policy support measures that included satellite internet and constellations, including G60. It was looking like there would be more than one NGSO broadband constellation in China, maybe. This opening up/competition would be driven largely by a desire to field a faster response to an ever-growing Starlink.
Fast forward a few months, and the plot has most certainly thickened. The biggest event by far was the ¥6.7B ($935M) round of funding announced by G60 constellation operator Yuanxin Satellite (aka SSST) last month, which was the largest round of funding by any Chinese commercial space company ever.
Most of the money appears to have come from various Shanghai Government and Chinese Academy of Sciences (CAS) entities, and the round almost completely overshadows another major event since November, a ¥600M ($90M) A-round by Genesat (格思航天), the company planning to manufacture the G60 constellation.
The billion dollars raised between the two companies should be a shot in the arm for the 108 satellites that SSST plans to launch within 2024. The first satellite rolled off the production line at Genesat’s Shanghai facility in Dec. 2023 in an event that looked more like an auto show, and one that got covered by the Shanghai Government. The project seems to be picking up momentum, and perhaps more importantly, confidence.
As was pointed out by the always insightful Christian over in the Megaconstellations LinkedIn group, SSST’s public remarks have also included contentious statements about their orbital filings, namely an implicit ownership of ITU filings reassigned by the Liechtenstein Office of Communications to Rivada Space Networks. Christian is spot-on with his analysis in the original post, so I will leave it at that, but the broader point here is that there seems to be growing assuredness that there will be a second Chinese NGSO broadband constellation, and that it will be deployed soon.
Beyond tons of updates from G60, the past few months have seen some activity from China SatNet. As reported a few days ago by Xinhua’s Hebei Bureau, the company’s Xiong’an headquarters is looking nearly complete, and surrounded by what looks like a nice lake, football pitch, and other modern offices in a new capital district that’s very much still being built.
Two huge constellations, financed by billions of dollars of government money, and with a need for speed in terms of development? It’s going to be an NGSO gold rush, and two things are for sure: 1) near-term, the National and Shanghai governments will burn through billions of dollars each building Guowang and G60. 2) An entire space industrial base that has grown up over the past few years is going to benefit, selling shovels to the two gigantic gold prospectors with gigantic, mostly state-funded bank accounts.
The Ones Selling Shovels
China’s commercial space industrial base has been progressing for some time, but now is a tipping point in terms of demand, with two huge NGSO broadband constellations being handed billion dollar checks (note: despite China SatNet being established 3 years ago and not progressing very quickly, they too might move faster now that there is competition (G60) that did not exist before). This is great news for the companies building satellites/components, the companies planning to launch the satellites, and the companies providing TT&C/ground services to the satellites. It’s also great news for the cities and provinces that are able to attract these companies.
Who are these companies and places? To pick a few that are illustrative of the hype surrounding China’s recent NGSO ongoings:
Despite the fact that China has >20 commercial launch companies, earlier this month we saw the establishment of a >21st, Aerospace S&T Rocket Technology Shanghai Company (航天科技火箭技术(上海)有限公司), with shareholders including CASC, (SAST subsidiary) the Shanghai Space Equipment Factory, the Shanghai Xinzhuang Industrial Zone Economic and Technological Development Company, and state-owned Shanghai Guosheng Group and a registered capital of ¥600M. The confidence to establish a launch subsidiary this late in the game is indicative of the persistent shortage of launch, but also probably of a catalyst on the demand side of things, e.g. demand for a large constellation in the newly-established company’s backyard.
ZJUniSat, a commercial spinoff of Zhejiang University, one of the best in China. The company has been around for quite a few years, but has only recently begun marketing their broader industrial capabilities, including a variety of communications and measurement/control subsystems that were showcased in a recent article. ZJUniSat is also indicative of the flow of technological capability from China’s state institutions (in this case, Zhejiang University) to the commercial sector. The recent article from ZJUniSat notes that their more than 30 sets of their transponders have been present on CAST and CAS SECM satellites, and with both companies involved in China’s NGSO broadband constellations, ZJUniSat may see order volumes skyrocket.
February saw the Chongqing Municipal Government publish the “Action Plan for High Quality Development of the Space Information Industry in Chongqing, Led by Satellite Internet” (《重庆市以卫星互联网为引领的空天信息产业高质量发展行动计划》). A more detailed version is available here, with the plan calling for, among other things, “encouraging the establishment of commercial satellite internet, while innovating the market-oriented construction and operation model, and supporting qualified commercial companies to actively participate in the construction of satellite internet constellations”. With Chongqing being home to multiple satellite application-focused subsidiaries of China SatNet, the city government is clearly trying to create a tailwind for these companies to invest and grow the municipal satellite internet sector.
And last but not least, Galaxy Space. The company has at times discussed launching its own NGSO broadband constellation, but seems in recent years to have identified high-end communications payloads/related components and mass-market applications as its real markets. That is, rather than taking part in the gold rush, they’ve decided to sell shovels. And some recent language in a launch agreement with CAS Space seems to indicate just that. The agreement a strategic cooperation framework for the first flight of CAS Space’s Lijian-2 rocket. and was signed “in order to meet the needs of Galaxy Space’s technology verification and constellation networking”. A somewhat timid characterization. At the ceremony, Galaxy Space VP Gao Qianfeng noted that “Looking into the future, Galaxy Space will continue to build a core capabilities based on space computing power, promoting the construction and application of satellite constellations , working with industry partners to accelerate the development of new productivity, and seize opportunities in the new space infrastructure era”. In short, rather than saying “we look forward to launching our own constellation and this is a first step”, the company said that they look forward to contributing to constellations. In plain English: we would rather sell picks and shovels than rush for gold.
To summarize: China has thrown >$1B each at two large NGSO constellations, with a National clique and a Shanghai clique emerging as the two big players. For awhile these projects are going to be burning cash as they launch hundreds if not thousands of satellites. And as a result, a whole lot of suppliers are going to win a whole lot of business, possibly creating a host of wealthy shovel salespeople in the process.
And the Rest of the Month’s News
The Wuhan Government published an article and some incredibly high-res photos on CASIC’s satellite factory located at the Wuhan National Space Industrial Base. Initially meant to build the Xingyun and possibly Hongyun constellation projects of CASIC (both of which have seemingly been shelved), the factory has likely built some of the 22 Tianmu satellites launched over the past ~16 months, and seems primed for some major satellite projects if CASIC ever figures out which ones it wants to build.
New on-orbit servicing company Sanyuan Space (三垣航天) announced a “tens of millions of Yuan” Pre-A round of funding, with money primarily coming from the Taicang Municipal Government via an investment fund. The company is a subsidiary of well-established Chinese commercial TT&C company Emposat.
From a few months ago, an update on leading EO company CGSTL’s IPO attempt, including some new financials. The good: revenues doubled in 2022 compared to 2021, to ¥600M. The bad: they continue to incinerate money, and aren’t forecasting much of an improvement.
An article from the insightful Satellite & Network noted that China Telecom has acquired international numbers for their Tiantong/Mate60 Pro service, making it “the first time that a Chinese telecommunications company has obtained international telecommunications phone number resources for a satellite communication service”. As a reminder, the Mate60 Pro was released late last year with direct-to-satellite features, which has since become a bit of a media and consumer hot topic in China.
A delivery ceremony took place for MisrSat-2, a joint Sino-Egyptian remote sensing satellite that launched from China in December 2023. The ceremony marked the successful completion of the contract fulfillment work of CAST’s MisrSat-2 project. The article refers to MisrSat-2 as a “landmark project in which the Chinese and Egyptian governments collaborate closely to implement the Belt and Road Initiative, and carry out in-depth space industry high-tech cooperation.
CASC saw its first launch failure since 2020 when the Yuanzheng-1S upper stage malfunctioned after a smooth ride from the LM-2C carrying the YZ-1S as well as DRO-A and DRO-B spacecraft. The two test satellites were meant to experiment with lunar navigation technologies. Both spacecraft would have been sent to lunar orbit and worked together with the DRO-L satellite launched on a Jielong-3 last year.
And last, but not least, a number of updates on the space sector from China’s Two Sessions, an annual pair of political events held in Beijing. The Two Sessions are typically an opportunity for a variety of power players from the government, SOEs, academic institutions, and the private sector to propose their ideas for a variety of topics. With space’s ever growing importance, this year saw several notable comments:
Beihang University Professor Zhang Tao proposed “accelerating satellite operation access to promote the development of the satellite internet industry and infrastructure construction”, during which time he noted that “the implementation of (Starlink) has brought unprecedented pressure to our country…(China’s) satellite internet industry is still in the on-orbit verification stage and has not formed operational capabilities similar to Starlink. In order to prevent being passive in space competition and encountering a “space blockade”, (China) urgently needs to accelerate the seizure of orbital resources, accelerate the development of a satellite internet industry, and build a Space-Ground Integrated Network in the 6G era as soon as possible”
Wang Wei from CASC called to speed up construction of a policy and regulatory system in teh space sector, noting that “A sound and complete aerospace policy and regulatory system is the key to the development of my country’s aerospace industry. An important guarantee is an important practice for the implementation of Xi Jinping’s thought on the rule of law in the aerospace field.”
Wang Runfu, deputy director of CAST’s Institute 510 put forward a proposal to enhance national level support for commercial space, with a focus on core satellite product capabilities, mentioning for example setting up a commercial space electric thruster test base.
Notably absent were comments from private sector players. As recently as a few years ago, Xiaomi CEO and active space industry investor Lei Jun could be counted on to give a few thoughts on space industry development, but no more (it should be noted that Lei still publishes an annual Two Sessions letter…he just hasn’t mentioned space in awhile). It’s hard to precisely read these tea leaves.
Quite a month in Chinese space, and this only scratches the surface on what was an absolutely manic few weeks. Our full monthly intelligence from this month included more than 50 updates, >100 sources, and 25 pages. For info on subscribing to Orbital Gateway Consulting’s full China monthly intelligence report, shoot us an email here.
Until next month, thanks for reading, and a Happy Easter and Happy Holi to those who celebrate.
Blaine
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