The Dark Horse for Building China's Starlink
Plus funding rounds from Laser Link and Ditel 📡, China launches MEO comms sats 🛰️, and South Africans at CGWIC 🇿🇦
Dear Readers,
Good day from steamy Singapore, where I sit this week for the Asia Satellite Business Week, organized by Novaspace. In addition to some great laksa and a heaping helping of durian, we’ve had lots going on in the Chinese space sector. Before getting into the monthly updates, though, a feature piece on CGSTL and how just maybe, they are putting themselves in a position to build satellites for China’s state-owned large non-geostationary (NGSO) communications satellite constellation. Let’s dig in.
The Dark Horse in China’s NGSO Race
For those who are new here, a very quick recap. SpaceX’s Starlink has taken the satellite communications (satcom) world by storm since it accelerated launches in early 2020. According to Nanoavionics, there were ~9,900 satellites on-orbit as of early May 2024. And according to the always excellent Dr. Jonathan McDowell, as of Feb 2024 there were some 5,800 operational Starlink satellites. That is, Starlink accounts for >50% of all satellites on-orbit today. Add to that the fact that Starlink is being used by militaries in Ukraine, Sudan, and other conflict regions, and you have yourself a geopolitically important megaproject. And it’s no surprise that China wants their own.
As we discussed a few months ago, there are at least two pretty credible NGSO communications constellations in China: the state-backed SatNet/Guowang constellation, and the partly state-backed but somewhat “commercial” G60/Qianfan constellation. Despite it only being announced with any seriousness a few months ago, we already know a heck of a lot more about G60/Qianfan than we do about SatNet/Guowang, as the former appears very keen for publicity and recognition, and the latter very much under wraps, possibly due to its Central government ownership, but as we will discuss today, possibly due to a lack of actual progress.
To give a very short summary of what we know about these two projects:
G60/Qianfan: constellation will be operated by Yuanxin Satellite aka SSST, a company that was provided ~$1B of funding from the Shanghai Government earlier this year. The satellites will be built by Genesat, a JV between the Chinese Academy of Sciences Shanghai Engineering Center for Microsatellites (CAS SECM) and Shanghai Aerospace Investment Limited (SAIL), a Shanghai Government fund. Recent statements from the company call for 648 satellites and APAC regional coverage by EOY 2025, and an additional 648 satellites for global coverage by EOY 2027. As we showed a few months ago, we have seen lovely, relatively high-definition photos of the first satellite that rolled off their production line back in Dec 2023. We also have information about some key suppliers, due to a number of public conferences and fora held in/around Shanghai over the past few months. In short, we know a decent amount.
Guowang: the constellation will be operated by China Satellite Networks Limited (SatNet), a centrally-controlled SOE established in April 2021. The constellation might have thousands of satellites, or >10,000 satellites, or some other undefined number. We have zero news of deployment timeline, we don’t know what the satellites look like, and we have no confirmation about who will build them.
This last point is a question I’ve spent a lot of time thinking about. SatNet is a centrally-controlled SOE that received ten billion yuan (~US$1.3B) in registered capital (a semi-meaningful metric in this context) when they were established. The project has all the endorsement of the state, and they are aiming to build a strategically important piece of infrastructure, arguably along the same level of importance as technologies such as satellite navigation. Their ITU filings are for ~13,000 satellites. With all the support and importance it begs the question….who is going to build all those satellites and why haven’t they started launching yet?
We’ve written a deep-dive report into the topic, and as the table below shows, there are a lot of candidates for companies that might be able to build hundreds of satellites per year now or soon. There are a few usual suspects that are likely to get the attention of SatNet, not least of which state-owned satellite manufacturer CASC via subsidiary CAST’s Tianjin factory. Other candidates include state-owned CASIC and their Wuhan satellite factory, and the plethora of commercial firms that are building communications satellite megafactories (e.g. Galaxy Space, possibly MinoSpace).
But there is one dark horse that is looking increasingly interesting in this context: China’s leading remote sensing satellite manufacturer, CGSTL.
Charming the Globe from Jilin Province
CGSTL, aka Chang Guang Satellite Technology Limited or sometimes Charming Globe, is a spinoff from the Chinese Academy of Sciences Changchun Institute of Optics and Precision Mechanics. Founded in 2014 as one of China’s first commercial space companies, CGSTL has since built and launched an impressive ~137 satellites, of which ~105 have come since the beginning of 2022. Almost all of these satellites have been part of the company’s Jilin remote sensing constellation, and while coming in all shapes and sizes, most of them are ~40kg, batch-manufactured satellites. In addition to building lots of satellites, CGSTL set the record for most satellites launched on a single Chinese rocket, when in June 2023 41 Jilin satellites were sent to orbit on a Long March-2D.
In terms of business model, to now CGSTL has found a number of primarily provincial and city government customers for its remote sensing satellite data and associated applications. A typical example: in 2022, the city of Meishan, in Sichuan Province, announced plans for the “Meishan Tianfu” constellation of remote sensing satellites. With a budget of some ¥220M, the city effectively bought the naming rights and localized data on 14 Jilin satellites from CGSTL. As part of the bargain, CGSTL goes to Meishan and builds a remote sensing data application center or similar, aiming to help the city of Meishan make use of the remote sensing data for things like land monitoring, natural disaster response, and so on.
Meishan gets naming rights for some satellites, the prestige of having a local space program, and hopefully, economic benefits from well-utilized remote sensing data. CGSTL gets an anchor client for their constellation, and they get to experiment in developing a bunch of use cases alongside the city of Meishan.
To now, this has worked well operationally for CGSTL (they’ve been able to launch a bunch of satellites), but financially it is an abysmal business model, with CGSTL reporting hundreds of millions of yuan of losses in various IPO prospectuses in preparation for an IPO that, ~2 years after announcement, has not happened yet. The financial pressure may have also led CGSTL to take some risks that they otherwise might not have taken, such as allegedly selling $30M worth of satellites to the Wagner Group, resulting in sanctions from the US Government.
A Pivot In Order?
With >130 satellites on-orbit representing one of the world’s leading remote sensing constellations, a pivot at this point by CGSTL would seem pretty risky. And yet, for a little while now the company has been making overtures that lead to more questions than answers, and seem to indicate greater interest in communications satellites.
The first hint came in January 2022, when company Party Secretary Jia Hongguang noted that in addition to remote sensing satellites, “(CGSTL) will continue to develop communication satellites to reserve sufficient technical foundation for the subsequent development of communication business”. Innocuous enough, but also unambiguous: CGSTL was looking into communications satellites.
In the ensuing ~2.5 years, CGSTL has launched a number of satellites with laser communications terminals, both for inter-satellite and space-to-ground communications. In collaboration with several blue-chip partners including the Aerospace Information Innovation Institute of the Chinese Academy of Sciences (AIRCAS), CGSTL has conducted progressively more impressive tests, culminating in a January 2024 test that reached 100 Gbps transmission speed between the on-orbit Jilin-1 MF02A01 and Jilin-1 MF02A02 satellites.
Reasonable people would correctly argue that all this technology could be used for remote sensing satellites. CGSTL’s satellites are collecting enormous amounts of imagery data every day, and downlinking that data via radio waves is complicated and bottleneck-ey. By developing lasers, they can transmit orders of magnitude more data per unit of time, making it easier to data dump tens of thousands of photos during a relatively short flyover of a ground station. And yet, when we put the laser comms piece together with a few more puzzle pieces, more questions than answers arise.
What Kind of Questions?
First, let’s take a look at CGSTL’s forecasted number of satellites to be launched, taken from their late 2023 IPO prospectus update and shown in the table below:
The company plans to launch 138 satellites between 2024 and 2026. A really tall order, but for a company that launched 54 satellites in 2022 and 48 in 2023, a pretty doable one. Impressive as the order may be, it actually represents a deceleration from the company’s previous statements. As recently as October 2022, our old friend Jia Hongguang said that they would launch another 160 satellites during the 14th Five-Year Plan, e.g. before EOY 2025. And yet, the figures above show more like half of that number. This is particularly noteworthy because CGSTL’s factory is already built, and it is a truly massive factory. If it’s not building dozens, if not hundreds of satellites per year, it’s a bit of a melting ice cube with a CAPEX in the hundreds of millions of USD.
And an even more recent (April 2024) interview by Jia conducted with Guoyuan Times led to a couple of really interesting nuggets: by EOY 2025, CGSTL aims to have 1,200 employees, and a manufacturing capacity of 1,000 satellites per year (!). And so the question arises: if CGSTL plans to launch 28 satellites in 2025 and 100 in 2026, what the heck are they going to use 1,000 satellites per year manufacturing capacity for?
Putting the Pieces Together
To review: we have a Chinese large NGSO communications constellation, Guowang, that has seen almost no discernible progress on-orbit despite having had 3 years and near-infinite government support. We have a bunch of satellite factories that have different claims to fame, but with almost none of them having actually put their money where their mouth is and churned out big numbers of satellites.
At the same time, we have China’s leading remote sensing satellite manufacturer, CGSTL, that has 1) built and launched ~100 satellites in 2 years, 2) made a partial pivot into communications technology since 2022, specifically laser comms, 3) scaled back their expectations for near-term satellite launches of their own, while 4) also scaled up their satellite manufacturing capacity (1,000 satellites per year by EOY 2025).
No one can predict the future of the Chinese space industry. But the lack of batch satellite manufacturing progress from more usual suspects (CASC, CASIC, etc.), and the relatively small scale of commercial upstarts (Galaxy Space), means that CGSTL is in a bit of a sweet spot. As a large CAS spinoff with massive support from Changchun City and Jilin Province, CGSTL has impressive scale and a bit more “national team” (e.g. state-owned/run) DNA than some of the others. With >100 satellites on-orbit that they built themselves, they have manufacturing chops. And with their pivot towards communications, they are developing critical technologies for comms constellations. Taken all together, this makes CGSTL the most intriguing of dark horses in the race to build China’s state-owned NGSO constellation.
In other news this month:
Leading commercial laser comms company Laser Link announced an A+ funding round as a follow-on to their Q3 2023 A round. According to the company, the two rounds totaled nearly ¥150M. Laser Link has developed several generations of laser comms terminals, most recently their Z4 terminal, which has achieved speeds of up to 20 Gbps on-orbit.
Later in the month, Ditel Communications announced a “nearly ¥100M” series C funding round. The company has developed a number of maritime-focused satcom terminals, as well as their own satcom network using Apstar-6D Ku-band HTS capacity to provide integrated maritime satcom services. Located in coastal Ningbo, Zhejiang, the company has benefited from indirect government subsidies including city governments allocating money to digitize their fishing fleets, leading to maritime satcom services being procured from Ditel.
Yuanxin Satellite, aka SSST, made some statements about deployment timeline for the G60 (aka Qianfan) constellation during the Cyber, Cloud, and Communications (C3) Safety Conference in Nanjing. According to company SVP Lu Ben (陆犇), they plan to launch a 648-satellite first phase by EOY 2025, offering coverage of the APAC region, and a 648-satellite second phase by EOY 2027 offering global coverage. By 2030, the company plans for 15,000 satellites on-orbit.
China Great Wall Industry Corp (CGWIC) hosted a South African delegation led by a “Mr Van Wyk”, President of South Africa’s Lesedi Company. Lesedi is a South African energy firm, and the meeting involved, among other things, Mr Van Wyk being presented with a model of the Chinese Space Station from CGWIC. More so than anything, the visit is an example of CGWIC’s vast business interests: in addition to being the designated commercial/international subsidiary of the Chinese state-run space industrial base, they have been known to bid for projects ranging from building highways in Africa to providing new energy solutions in South Asia.
A recent job posting from the Chinese Academy of Science Shanghai Engineering Center for Microsatellites (aka SECM) showed historical employee figures for SECM and for JV subsidiary Genesat (aka the manufacturer of the G60 constellation). On the whole, employee count has grown from 697 in 2018 to 1,040 in 2024, with a clear leveling off over the past 2 years. Genesat has interestingly seen a decline in employees from 2021 to 2024, which is not what we’d expect given the massive ramp-up in G60 over the past year or so.
Serbia allegedly joined the International Lunar Research Station during President Xi’s visit there earlier this month, however details are a bit murky. The only official mention we saw was a readout from China’s Ministry of Foreign Affairs, which provided a long list of different agreements signed during the visit. Number 16 on the list is “MoU Between CNSA and the Ministry of Science, Technological Development and Innovation of the Republic of Serbia on the International Lunar Research Station”. As someone who cannot read Serbian, I haven’t checked the Serbian press, but all things considered it feels a bit tenuous, especially given that there is no official announcement on the website of CNSA, and since all English-language coverage seems to link back to a single SpaceNews article that linked to the above MFA readout with no further confirmation or sources.
The Haidian District of Beijing issued the “Haidian District Action Plan for Building a Commercial Space Innovation Highland (2024-2028)” on 6 May. The plan calls to develop a large commercial space industry in Haidian District through a variety of measures, with specific projects including build a large-scale commercial constellation system, strengthening satellite TT&C capabilities, and other initiatives.
The first two satellites in China’s medium-earth orbit (MEO) comms constellation, the unfortunately-named “Smart SkyNet” (智慧天网) launched from Xichang on 9 May. The satellites were built by the SAST 509th Institute, and are part of the planned first-generation of 8 satellites orbiting at 20,000km. The constellation has future plans for 16 and eventually 32 satellites. The project has been strongly endorsed by the Shanghai Government, and the fact that it’s begun launching should be a good sign for the LEO G60 constellation, which has been similarly endorsed by Shanghai.
Wang Zhifeng, Founder of RSpace (aka Jiutian Xingge), was interviewed by Investor Circle. An example of the deepening of China’s commercial space sector, RSpace is focused on propellant tanks for rockets. With 2023 revenues in excess of ¥15M, the company has found buyers among SOEs, and support from the government of Yantai, Shandong, where China is building its Oriental Spaceport a sea launch facility.
GeeSpace exhibited at the 2024 Beijing Auto Show, which actually took place in late April. The company was showcasing their satellite direct-to-vehicle connectivity technology, which they have apparently adapted for the Jikrypton 009, 001FR, 007, and Galaxy E8 (all built by parent company Geely). This is but the latest instance of Chinese commercial space companies targeting mass-market, consumer-focused products and services.
And finally, fascinating insight into the space investment scene in Xi’an, Shaanxi Province. With a pretty direct headline of “Xi’an is Crowded with VCs Investing in Commercial Space”, the article talks about how a few years ago, coffee shops in Xi’an were full of people talking about investing in new apartments. Today, they are full of people talking about angel investment into space companies. It’s probably a bit early to start using the word that starts with b- and ends with -ubble, but definitely something to keep an eye on.
Thanks for reading, and see you next month.
Blaine