Taiwanese iPhone assembler Foxconn’s satellite business ambitions have lifted off with a successful launch that the company sees as an entry point into a space industry forecast to grow to $1 trillion.
Two experimental satellites developed by the company with Taiwan’s National Central University were launched together on a SpaceX rocket from California last month.
Weighing about 9 kilograms each, Pearl-1H and Pearl-1C are equipped with high-speed telecommunications capabilities and go around the planet every 96 minutes in low Earth orbit at roughly 520 kilometers. They successfully communicated with ground control in Taiwan after their launch.
The two satellites will be used for communications experiments and space exploration over the next year, according to Foxconn Chairman Young Liu. If all goes well, testing for such applications as automotive communications will proceed, Liu said.
Morgan Stanley sees the global space industry generating more than $1 trillion in revenue in 2040 — 2.6 times its 2022 estimate. Foxconn, formally Hon Hai Precision Industry, wants a piece of this growth, which will be driven in part by satellite internet service.
Elon Musk-led SpaceX reduced the costs of rocket launches and established the Starlink network of commercial communications satellites. Amazon has followed SpaceX into the communications satellite business, and startups have become active in this area.
Low Earth orbit satellites are expected to number 17,350 by 2030, according to the Taipei-based Market Intelligence & Consulting Institute (MIC) — 2.3 times its 2023 figure.
The satellite industry will eventually move toward vertical specialization, much like the smartphone industry, said Jesse Chao, Foxconn’s official in charge of beyond-5G communications, in Taiwanese media.
While it aims to be a contract manufacturer, Foxconn is also trying its hand at satellite development in a similar approach to its move into electric vehicles.
Foxconn’s business model for EVs is to land manufacturing contracts from a wide range of clients, be they large corporations or startups. Costs will be lowered through mass production. It has developed an EV platform and taken other steps to pitch itself as a one-stop shop to EV brands.
For the satellites launched in November, Foxconn was involved from the initial design phase of the development project and supplied such basic components as wiring harnesses and camera systems.
Synergies are expected between communications satellites and EVs. Satellites can provide connections in mountains and other remote areas, making them a good fit with the autonomous-driving and connected-car technologies being developed by Foxconn-led EV tech consortium MIH.
Foxconn’s search for fresh earnings sources comes ahead of its 50th anniversary in 2024. Assembling iPhones is core to its annual revenue of roughly $200 billion, but its net profit margin is stuck at the 1% to 2% level, owing to such factors as slowing growth in the smartphone market.
In 2020, Foxconn established the Hon Hai Research Institute, which has worked to develop technologies in quantum computing and in semiconductor devices that use next-generation materials. Satellite development is part of the efforts.
Foxconn faces challenges to expanding into the space industry. The company needs to build up a track record, for one, but recruitment presents a high hurdle.
“Taiwan’s space development is focused on academic research, so there is still only little talent who can go on to work in industry,” MIC analyst Tseng Chiau-ling said.