On March 5, A-share markets witnessed a surge in 6G and Satellite Internet concepts, with notable gains seen in companies such as Transcomm, Taicheng Optical, Yangtze Communications, China Satcom, Taifu Technology, and Kingsignal.

A key meeting highlighted the need to deepen the integrated cluster development of strategic emerging industries. To this end, large-scale application demonstrations will be carried out for new technologies, products, and scenarios, fostering the safe and healthy growth of industries like commercial aerospace and the low-altitude economy. Additionally, a growth mechanism for future industry investments will be established, aiming to nurture sectors such as biomanufacturing, quantum technology, embodied intelligence, and 6G.

Previously, the 14th Five-Year Plan for the Digital Economy emphasized the acceleration of satellite communication network deployment and the promotion of Satellite Internet construction. It is anticipated that the deployment of Satellite Internet will gather pace in the coming period.

Satellite Internet, characterized by low capacity, requires the launch of numerous satellites to achieve global coverage and maintain high network speeds.

The competition for future mobile communication technology has escalated from ground-based systems to space-based ones. Many Chinese companies have already embarked on their respective layouts, with China Aerospace Science and Technology Corporation (CASC) and China Aerospace Science and Industry Corporation (CASIC) unveiling the "Hongyan Constellation" and "Hongyun Project" plans, respectively, and launching experimental satellites.

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

The Satellite Association reports that global satellite industry revenue grew at an annual rate of approximately 3% from 2015 to 2018, reaching $277.4 billion in 2018. CCID Consulting predicts that by 2030, China's Satellite Internet market size will soar to the hundreds of billions level.

As Satellite Internet is still in its nascent stage, upstream industries including satellite manufacturing, satellite launching, ground equipment, and satellite operations stand to benefit first.

Within the satellite industry chain, satellite launching, satellite manufacturing, ground equipment, and operational services account for 2.24%, 7.03%, 45.13%, and 45.6% of revenue shares, respectively. Operation and maintenance services represent the most valuable branch of the industry. However, due to the rapid expansion of the entire market, leading enterprises across various sectors present ample opportunities.

In April 2021, the establishment of China Satellite Network Group (Star Network Group) marked the official entry of the "national team," accelerating the development of China's Satellite Internet industry.

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

T/R chips are predominantly used in radars, especially phased array radars. The United States has fully upgraded its active phased array radars for fighters like the F-15C, F-15E, and F-18E, while the F-22 and F-35 fighters are mandated to be equipped with them. The THAAD anti-missile system boasts over 10,000 T/R components in a single phased array system. As a core component, T/R chips are estimated to constitute 40%-50% of radar costs, underscoring their critical importance.

Satellite T/R components demand higher performance standards, with over 90% of Chengchang Technology's revenue derived from satellite-borne business. According to GF Securities' calculations, the market size of T/R chips is projected to increase to RMB 82.3 billion by 2025, with low-orbit satellites accounting for RMB 15 billion.

Due to the high industry barriers, besides 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 (CETC), with annual shipments of 1-1.5 billion chips. In contrast, Chengchang Technology can only reach a few hundred thousand, resulting in a lower market share.

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

The aerospace investment to output ratio stands at 1:10, and Satellite Internet can propel the downstream application market to reach a size of trillions of yuan. Thus, satellite applications and operational services present vast potential.

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

Furthermore, companies such as China Satellite, which focuses on satellite manufacturing and applications under CASC, and China Satcom, which operates the satellite space segment, will reap the benefits of the grand Satellite Internet strategy.

Terahertz communication represents the transition from electronics to photonics, effectively addressing the growing scarcity of frequency band resources. It is considered a core communication technology for 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 renowned as the "world's first 6G experimental satellite."

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

Beyond mobile communications, terahertz technology is also widely utilized in large-scale security inspection equipment, precision medical devices, 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. They are among the few listed companies that have generated performance in this field.

From 5G to 6G, Ultra-Massive MIMO technology continues to evolve. Ultra-large-scale intelligent antennas can be applied to high-speed scenarios such as high-speed rail and airplanes, urban macro coverage, precise positioning, and other fields, enabling boundaryless connections under global coverage.

Among these advancements, Reconfigurable Intelligent Surfaces (RIS) and electromagnetic wave angular momentum are two significant research directions. RIS can endow antennas with greater intelligence and enable large-scale use with low power consumption by reconstructing the propagation environment. On the other hand, electromagnetic wave angular momentum can enhance spectral efficiency without consuming additional spectrum and time.

The IMT-2030 (6G) Promotion Group of the Ministry of Industry and Information Technology has collaborated with China Mobile, China Telecom, ZTE, Huawei, Unisoc, and others on relevant technological research and development. ZTE, in partnership with China Unicom, has completed the industry's first technical test of an RIS reflective panel in 5G mid-band frequencies.

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

In comparison, Satellite Internet within the 6G industry serves as the prerequisite and cornerstone for industrial implementation. It has entered an accelerated phase and warrants more attention than terahertz and ultra-dimensional antennas.

Whenever a new generation of mobile communication commences commercial use, research on the subsequent generation of mobile communication has already commenced. At the current juncture, the 6G era is gathering momentum.

As the commanding heights of the next-generation information industry, this represents 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 the 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——