Amazon's Kuiper project reportedly aims to deploy over 3,236 low-orbit satellites in the medium to long term. To this end, the company has inked contracts with several rocket launch firms and anticipates offering low-orbit satellite commercial services by 2026. A manufacturer in the low-orbit satellite sector revealed that Amazon is intensifying procurement efforts, with orders surging severalfold this year.

China has also mobilized in the satellite industry chain. The 14th Five-Year Plan for the digital economy highlighted the need to expedite the deployment of satellite communication networks and foster the development of satellite internet. It is foreseeable that the expansion of satellite internet will accelerate in the near future.

Satellites provide an internet access method with limited capacity. To achieve global coverage and maintain high internet speeds, a greater number of satellites must be launched.

The competition for future mobile communication technologies has escalated from terrestrial to space. Numerous Chinese companies have initiated plans, with Aerospace Science and Technology Corporation and Aerospace Science and Industry Corporation unveiling the "Hongyan Constellation" and "Hongyun Project" respectively, and launching experimental satellites.

According to the plans, the "Hongyan Constellation" will deploy over 300 low-orbit satellites, while the "Hongyun Project" will launch 156. Combined with other companies, the total number of satellites to be launched during the 14th Five-Year Plan period will reach 2,198.

According to the Satellite Industry Association of the United States, from 2015 to 2018, the global satellite industry's revenue growth averaged approximately 3% annually, reaching $277.4 billion in 2018. CCID Consulting predicts that by 2030, China's satellite internet market size will surge to the tens of billions level.

As satellite internet is still in its nascent stage, upstream industries like satellite manufacturing, satellite launch, ground equipment, and satellite operation will be the first to reap benefits.

In the satellite industry chain, the revenue shares of satellite launch, satellite manufacturing, ground equipment, and operation services are 2.24%, 7.03%, 45.13%, and 45.6%, respectively. Operation and maintenance services represent the most valuable industry segment. However, due to the rapid expansion of the entire market, leading enterprises across various sectors have ample opportunities.

In April 2021, China Satellite Network Group (Xingwang Group) was officially established, marking the official entry of the "national team," and propelling China's satellite internet industry into an acceleration phase.

Chengchang Technology, a subsidiary of Heerthai (002402.SZ), specializes in T/R microwave millimeter-wave RF chips. It is the only private enterprise in China capable of undertaking national-level large-scale launch missions. Its products have been utilized in major projects such as the Beidou Navigation Satellite System Generation 2 and satellite communication.

T/R chips are primarily used in radars, especially phased array radars. The United States has comprehensively upgraded its active phased array radars for its F-15C, F-15E, and F-18E fighter jets, while F-22 and F-35 must be equipped with them. The THAAD anti-missile system features tens of thousands of T/R components in a single phased array system. As a core component, T/R chips are estimated to account for 40%-50% of the cost of radars, underscoring their crucial role.

The performance requirements for satellite T/R components are even more stringent, with over 90% of Chengchang Technology's revenue derived from satellite-related businesses. According to Guojin Securities' calculations, the market size of T/R chips will grow to 82.3 billion yuan by 2025, of which low-orbit satellites will account for 15 billion yuan.

Due to the exceptionally high industry barriers, in addition to Chengchang Technology, the domestic enterprises that master phased array T/R chips are the 13th and 55th Research Institutes of China Electronics Technology Group Corporation, with annual shipments of 1-1.5 billion pieces. Chengchang Technology, on the other hand, can only reach a few hundred thousand pieces, holding a relatively low market share.

With the surge in downstream market demand, Chengchang Technology, as one of the very few "seed players" in China and a "scarce target" in the capital market, possesses significant potential.

The investment-to-output ratio in the aerospace industry is 1:10, and satellite internet can drive the downstream application market size to reach trillions of yuan. Therefore, there is immense potential for satellite applications and operation services.

Building on the accelerated implementation of the Beidou industry, BDStar Navigation (002151.SZ) has gradually emerged from past challenges. Its business spans the upstream, midstream, and downstream of the Beidou industry.

Additionally, China Satellite, a subsidiary of Aerospace Science and Technology Corporation specializing in satellite manufacturing and application, and China Satcom, which operates the satellite space segment, will both benefit from the grand strategy of satellite internet.

Terahertz communication marks the transition from electronics to photonics, effectively addressing the increasing scarcity of frequency band resources. It is regarded as a core communication technology in the 6G era.

In June 2020, a satellite named "University of Electronic Science and Technology of China" was successfully launched in Taiyuan. It will conduct terahertz communication technology experiments in space and is known as the "world's first 6G experimental satellite."

Recently, China has set a new world record for the highest real-time transmission speed in terahertz wireless communication, demonstrating its leading position in this field.

Besides mobile communication, terahertz technology is widely utilized in large-scale security inspection instruments, precision medical instruments, military radars, and other domains.

China Unicom has established a terahertz joint innovation center. Tianyin Electromechanical and its subsidiary Huaqing Ruida have undertaken terahertz communication technology experiment projects for a certain unit of the People's Liberation Army and have successfully delivered them. It is one of the few listed companies that have generated performance in this area.

From 5G to 6G, ultra-massive MIMO technology continues to evolve. Ultra-massive intelligent antennas can be applied to high-speed scenarios such as high-speed rail and airplanes, urban macro coverage, precise positioning, and other fields, achieving seamless connectivity under global coverage.

Among these, intelligent reconfigurable surfaces (RIS) and electromagnetic wave angular momentum are two major research directions. Intelligent reconfigurable surfaces can enhance antenna intelligence, enabling large-scale use with low power consumption by reconfiguring the propagation environment. Electromagnetic wave angular momentum can improve spectral efficiency without consuming additional spectrum and time.

The IMT-2030 (6G) Promotion Group of the Ministry of Industry and Information Technology has conducted related technology research and development in collaboration with China Mobile, China Telecom, ZTE, Huawei, Unisoc, and others. ZTE has partnered with China Unicom to complete the industry's first technical test of an intelligent reconfigurable surface reflective panel in the 5G mid-band.

However, the research and development of ultra-massive MIMO technology are still in the theoretical validation and experimental stages, and industrial implementation faces numerous uncertainties, far from contributing to the performance of related enterprises.

In comparison, satellite internet in the 6G industry serves as the premise and cornerstone for industrial implementation. It has now entered an accelerated promotion phase and is more noteworthy compared to terahertz and ultra-dimensional antennas.

Whenever a new generation of mobile communication commences commercial use, research on the next generation of mobile communication has already commenced. At the current juncture, the 6G era, with a scale exceeding 10 trillion yuan, is accelerating its arrival.

As the pinnacle of the next-generation information industry, this is another "war" that cannot be lost.

Disclaimer

The content related to listed companies in this article is based on the author's personal analysis and judgment drawn from information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports, and official interaction platforms). The information or opinions presented in the article do not constitute any investment or other business advice. Market Value Observation does not assume any responsibility for any actions taken as a result of adopting this article.

——END——