Source: CICC CICC 1
Driven by SpaceX's Starlink program, the world has set off a climax in the construction of the low-orbit constellation program, and the number of satellite launches has increased significantly since 2017. On April 20, 2020, satellite Internet was included in the scope of new infrastructure for the first time. We believe that China's low-orbit satellite constellation construction is expected to enter a stage of rapid development in the future. In this report, we start by analyzing SpaceX's disruptive innovation and see the development opportunities of Chinese commercial aerospace companies in the satellite Internet era.
Summary
What is SpaceX's disruptive innovation:
SpaceX has greatly reduced the rocket launch cost in more than ten years after its establishment. Currently, the launch price of the Falcon 9 rocket is only 30% of that of its main competitor Arian V. SpaceX deploys its Starlink program at a speed of 60 satellites every 2 to 3 weeks, and is expected to become the world's largest satellite Internet operating company by the end of 2020. We believe that: 1) Rocket recyclable technology; 2) Launching technology of multiple satellites with one arrow; 3) Industrial production of satellites is its main technological innovation. The reason behind its success, the vertical integrated business model of "rocket development + satellite development + launch service" has formed a relatively obvious cost and speed advantage.
Where are the business opportunities of satellite Internet:
We believe that the main business opportunities of satellite Internet include (1) satellite Internet + electric vehicles, accelerating the development of intelligent driving; (2) satellite Internet + sensors, accelerating the development of Internet of Things in energy, industry and other industries; (3) broadband data upgrades of private networks of government, maritime, aircraft and other enterprises. Driven by low-orbit constellations in various countries, Statista estimates that the global aerospace economy will reach about US$600 billion by 2030; among them, the satellite broadband market based on satellite Internet will increase to US$46 billion, a 5-fold increase between 2020 and 2030, and a derivative application market will increase to US$99 billion, and a 100-fold increase from 2020 to 2030, providing broad development space for global commercial aerospace and application service companies. We estimate that if SpaceX's Starlink plan can complete the deployment of the first batch of 1,600 satellites in 2020 and start commercial services, it is expected to break even around 2025 and become a satellite Internet operator worldwide that serves more than 10 million users by 2027.
How do Chinese commercial aerospace companies seize the business opportunities of satellite Internet:
Since 2015, China has been born, commercial rocket companies represented by Interstellar Glory, Blue Arrow Aerospace, Galaxy Power, Science and Technology Rockets, Long March Rockets, and commercial satellite companies represented by Micro-nano Starry Sky, Galaxy Aerospace, Tianyi Research Institute, etc. In terms of rockets, Hyperbola, Fast Boat and Jetlong series commercial rockets have been successfully launched. In terms of satellites, Changguang satellites already have relatively stable service capabilities in the field of remote sensing, and Micro-Nan Starry Sky has satellite whole-satellite design and integrated testing capabilities. Driven by new infrastructure, we believe that the development of these commercial aerospace companies is expected to enter the fast lane, and at the same time it will drive the rapid development of China's commercial aerospace industry chain.
is optimistic about the development opportunities brought by the implementation of Beidou and remote sensing commercial applications.
After nearly 20 years of deployment, China's Beidou-3 satellite navigation system has been close to GPS in positioning performance. In the future, we are optimistic about the implementation of Beidou in various vertical industries, which is expected to drive the rapid development of new applications such as intelligent driving, precision agriculture, high-precision surveying and mapping, and smart cities. With the rapid development of artificial intelligence big data, the importance of satellite remote sensing data continues to rise. In the future, we are optimistic about the development of downstream applications such as infrastructure and environmental monitoring to drive rapid growth of enterprises.
risk
commercial launch orders are lower than expected; downstream satellite applications commercialization are lower than expected; commercial rocket and satellite technology research and development and production are lower than expected.
Text excerpt
Starlink set off a climax of low-orbit constellations
Elon Musk first proposed the "Starlink Plan" in 2015. The plan is divided into two phases and three phases, and plans to launch a total of 12,000 satellites to multiple earth orbits between 550-1,325 kilometers, forming a broadband satellite communication network that can cover the world, and expand the total scale of satellites to 42,000 in 2019.SpaceX has started satellite launches in May 2019. As of May 18, 2020, it has successfully launched 7 satellites into orbit (including test stars). In terms of the number of satellites, it has become one of the world's largest satellite operators. At the current speed of launching "60 stars in one arrow" every 2 to 3 weeks, we expect SpaceX will have about 1,600 satellites by the end of 2020, which is more satellites than any country as of 2019Q3.
Chart: The world's top 6 satellites and SpaceX satellite launch plan (we assume it launches twice a month)
Source: UCS, FCC, ITU, People's Daily, "SpaceX Low Orbit Broadband Constellation Development Analysis and Inspiration" (International Space, Li Bo, 2018 Issue 8), China Securities Research Department Note: We assume that SpaceX launches twice a month; the number of existing satellites in SpaceX as of 2020/5/18 data and future plans come from FCC and ITU; China's data comes from People's Daily, as of the end of November 2019; the remaining data comes from UCS, as of 2019/9/30
spectrum and orbit resources are the two core resources of satellite communications, and are becoming the focus of competition,
orbit orbit, and are mainly divided into geosynchronous orbit (GEO), low orbit (LEO) and medium orbit satellite (MEO) from the ground.
GEO track resources are already relatively tight, and LEO track resources are becoming the target of competition. The orbit position of the GEO satellite is fixed at 35,800 kilometers above the equator, and the orbital resources are limited. As of Q3 2019, the world's in-orbit satellites reached 2,218, a significant increase compared with 2011 (986).
In 2017, the number of global LEO satellites increased significantly, and low-orbit satellite constellations developed rapidly. 1) 2017 LEO satellites worldwide, a significant increase compared with 80 in 2016. The main reason is the growth of LEO satellites in the United States; 2) 2017 and 2018 LEO satellites were launched at about 300, and SpaceX plans to launch about 1,600 satellites in 2020, an order of magnitude; 3) Currently, the proportion of LEO satellites in the United States and China has reached more than 70%, and the advantage of the number of low-orbit satellites is relatively obvious.
Chart: GEO resources in satellite orbits are already relatively tight, and there is a trend of developing towards medium and low-orbit satellites
Source: Official websites of satellite constellations, Wikipedia, CICC Research Department. Note: According to the official website of Beidou, the Beidou-3 satellite navigation system consists of 24 medium earth orbits, 3 geostationary orbits and 3 inclined geosynchronous orbits, and a total of 30 satellites,
New infrastructure promotes my country to accelerate the construction of satellite Internet
00 Since 2020, the country's promotion of new infrastructure has accelerated, and typical examples of 5G construction has officially entered the implementation period. The official definition of "new infrastructure" contains three key words: , "information, integration, innovation" . Among them, in the information infrastructure, the focus is on , "communication network infrastructure represented by 5G, Internet of Things, industrial Internet, and satellite Internet [1]" . "New infrastructure" includes "satellite Internet" into its coverage, which shows the rapid development of commercial aerospace (including satellite) technology, and also shows the country's emphasis on space development and "integration of world information networks", and the satellite industry is facing development opportunities.
"Satellite Internet" helps to improve the "Sky-earth three-dimensional communication network" and is one of the directions for the development of communication technology in the future. communication technology has developed rapidly and has developed to the fifth generation. But the network has always been formed on the ground and no three-dimensional expansion has been achieved. Looking ahead, we believe that 6G technology may expand the human communication area from plane to space, and the deep integration of medium and low-orbit satellite constellations with the ground network will continue to mature in the future network evolution, forming an integrated network of sky, space and earth. "5G+satellite networking = 6G" is an important development direction [2].
Chart: On April 20, 2020, the National Development and Reform Commission gave the national authoritative definition and scope of "new infrastructure". Satellite Internet was included in
Source: Official website of the State-owned Assets Supervision and Administration Commission of the State Council, Xinhua News Agency, CICC Research Department
Chart: Satellite Internet is an important supplement to the ground network. The integrated communication network in the world may be one of the future development directions
Source: China Communications Standardization Association, SpaceX official website, Ai Aerospace Network, CICC Research Department
Where is the market for commercial aerospace
Traditional aerospace applications are mainly satellites, including four major directions: communication, navigation, remote sensing, and scientific research. With the rise of commercial space, new directions have emerged, satellite Internet has emerged in the field of satellite communications, as well as space travel, space mining, deep space exploration, etc. Longer-term things such as building space bases and immigrating to Mars are also possible future development directions for human aerospace technology.
Chart: Application direction of commercial aerospace
Source: Official websites of various operators, "White Paper on the Development of China Satellite Navigation and Location Services Industry", GSA, Euroconsult, CICC Research Department
Chart: Statista predicts that the global aerospace economy will be close to US$600 billion by 2030
Source: Statista, CICC Research Department
Satellite Communications: Satellite Internet + unmanned driving may lead the next wave of technology. We believe that compared with ground communication, satellite communication has: 1) advantages: wide coverage area; 2) disadvantages: Due to the long orbital position and high cost of sending stars, the signal time is prolonged, the coverage depth is weak, and the communication rate is low, so new terminal support is needed. We believe that through the vertical integration of electric vehicles + satellite communications Internet, the problems of high capital expenditure and poor coverage of Internet of Vehicles can be broken, and may bring the next wave of revolution to the smart travel industry.
Satellite Navigation: The performance of Beidou third generation is close to GPS, and we pay attention to development opportunities in vertical industries. After the deployment of the entire constellation of the Beidou third generation, the performance is close to GPS. Most Android phones (such as Huawei, Xiaomi, OPPO, Vivo, etc.) and applications sold in mainland China have fully supported Beidou-based positioning services, and all 5G base stations of operators also use 5G timer services. With the strong promotion of national policies, we see that Beidou's implementation in industries such as intelligent driving, precision agriculture, high-precision surveying and mapping, and smart cities is expected to bring broad application prospects. In the Beidou industrial chain, companies with technical and qualification barriers such as China Satellite, Haigrid Communications, Beidou Starcom, etc. are worth paying attention to.
Satellite remote sensing: Commercial applications such as infrastructure and environmental monitoring are rising rapidly. 1) According to Euroconsult, the global commercial remote sensing data and value-added services market size in 2017 was approximately US$4.6 billion, and is expected to reach US$7.3 billion in 2025. 2) Infrastructure and environmental monitoring currently account for 26% and 22% of the data value-added service market, respectively, and commercial applications are rising rapidly. 3) my country's satellite remote sensing industry has great room for development in terms of application level, depth and breadth. Globally, Planet Labs and DigitalGlobe are relatively leading in the number and resolution of remote sensing satellites; in the domestic market, Changguang Satellite's remote sensing data has strong service capabilities.
Chart: Analysis of business opportunities in the four major sub-sectors of the satellite Internet for the communications market (global)
Source: Official websites of various operators, SpaceX official website, CICC Research Department
Chart: SpaceX Satellite Internet (i.e. Starlink) Measurement
Source: Official websites of various operators, FAA, SIA, SpaceX official website, CICC Research Department
Commercial rockets are one of the bottlenecks that restrict the development of commercial aerospace
Commercial rockets: Recycling and reuse are key factors in achieving low-cost and efficient launch. SpaceX dominates the commercial launch market, and we believe that its success is mainly due to its leading recyclable and reusable technology. Based on the launch price of Falcon 9, we estimate that if the first child is reused and the second child is not reused, the cost of the rocket after 10 reused times can be saved by 56%.We believe that the key to achieving low cost is: (1) Reasonable thrust and arrow body structure design, laying the foundation for the implementation of orbital launch, (2) Reusable and cost-controllable liquid fuel, and (3) Breakthroughs in the technical difficulties of rocket recovery and reuse such as variable thrust, attitude and navigation control, landing support, etc. The possible future development paths of Chinese companies: (1) The thrust of the carrier rocket has from small to large, (2) The propellant has from solid to liquid, and ultimately (3) The development of recyclable and reusable technologies to reduce costs on a large scale.
Chart: The technological development path of low-cost commercial rockets
Source: FAA, official websites of various companies, Wikipedia, CICC Research Department
Satellite production moved from the "customization" era to the "industrialization" era
00 Before 2014, the number of satellites launched around the world each year. With the rise of low-orbit constellations, the annual number of satellites has experienced a rapid growth of 100-300-1,000. We estimate that microsatellite production will add US$20 billion/year to the global output value. The growth in satellite demand will inevitably bring about changes in production models and industrial chains. In terms of production model, we believe that there are four main influencing factors: modular design, flexible production line, rapid AIT, and supply chain optimization. At the same time, the satellite development and production cycle will be shortened from the traditional 30 months to several weeks/day.
Chart: Driven by the rapid growth of technology and demand, satellites are expected to move from "customization" to "industrialization" production
Source: People's Daily, SpaceX official website, Airbus official website, "Satellite and Network: Constellation plan emerges intensively, satellite factories may be built in China" (Satellite and Network, Issue 12, 2018), CICC Research Department
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