Competing in the satellite race: strategies for Taiwanese enterprises

Allen Hsieh, Taipei; Vyra Wu, DIGITIMES Asia 0

Credit: AFP

The contours of the low-Earth orbit(LEO) satellite industry are gradually coming into focus, presenting both opportunities and challenges for Taiwanese enterprises.

According to BWant, an OTA testing firm, the impending launch of SpaceX's D2C (Direct to Cell) LEO satellites in 2024 marks a pivotal shift in the supply chain dynamics. While traditional user terminals (UT) face saturation due to the maturity and cost-effectiveness of SpaceX's Starlink product, emerging demands such as D2C offer new avenues for Taiwanese manufacturers to explore.

In the realm of the second-generation Starlink, the direct satellite-to-terminal connections herald a significant breakthrough in satellite communication technology. Anticipated features, including text messaging support in 2024 and subsequent plans for voice communication, underscore the evolution of this sector.

Insiders reveal that while Taiwanese manufacturers may find limited profit margins in the Starlink UT segment, opportunities lie in focusing on satellite components. Most notably, Universal Microwave Technology has emerged as a key player, specializing in passive components like waveguides guiding and broadcasting high-frequency signals.

Conversely, Eutelsat OneWeb, representing European interests, faces challenges stemming from corporate restructuring and a complex shareholder landscape. Despite significant ownership by Eutelsat, decision-making authority remains fragmented due to diverse shareholder interests.

Practically speaking, collaboration opportunities with OneWeb offer potential for Taiwanese companies, particularly in user terminals and phased array antennas. However, challenges persist as OneWeb's procurement process relies heavily on non-recurring engineering (NRE) fees, often insufficient to cover actual development costs or guarantee orders.

Intellian Technologies, a South Korean antenna manufacturer, dominates OneWeb's flat panel antenna orders, bolstered by close ties with OneWeb's shareholder Hanwha Group and established manufacturing partnerships. This dominance poses formidable challenges for Taiwanese manufacturers seeking to secure a foothold in OneWeb's supply chain.

While the international satellite operator supply chain is firmly established, Taiwanese enterprises may find success by targeting emerging demands like D2C or aligning with new market entrants rather than directly competing with established players in user terminals and antennas.