Capacity crunch could abort US satellite boom as sanctions threaten Russian launches

April 11 (Reuters) – Houston, we have a problem!

US rocket companies face the daunting task of ferrying hundreds of satellites into space in the coming years as sanctions sideline Russia’s space launch industry.

SpaceX, Astra Space (ASTR.O) and Rocket Lab USA (RKLB.O) are among a handful of US companies expected to fill the void, but industry officials doubt their ability to accelerate quickly.

As the race between companies, including SpaceX-owned Elon Musk’s Starlink and Amazon.com Inc’s Project Kuiper, to build giant satellite constellations to deliver broadband internet from space heats up, the demand for launches is expected to skyrocket.

More than 800 satellites weighing less than 100 kilograms are expected to be launched this year alone, almost double the number of launches in 2021, according to data from launch services aggregator Precious Payload.

And with Project Kuiper taking on significant capacity over the next few years, analysts expect the industry to face launch-related delays.

“In 2024, 2025, when all these mega constellations need a launch, there will be a real problem,” Rocket Lab CEO Peter Beck told Reuters, referring to the communications satellite networks being built by SpaceX, AST Spacemobile (ASTS.O) and One Web.

Rocket Lab is part of a new breed of companies building miniaturized propulsion systems to take advantage of an exponential increase in demand for placing compact satellites in so-called low Earth orbit.

In 2021, satellites launched by OneWeb and SpaceX accounted for the launch of about three-quarters of small satellites, according to industry analyst firm BryceTech.

Yet Russia has retained a 16% share of the global launch market over the past five years, according to historical databases.

Its share was actually larger, given that Soyuz rockets were also launched as part of a since-suspended Franco-Russian joint venture named Starsem.

About two-thirds of Soyuz launches were commercial or in support of the International Space Station (ISS), while the rest were for Russian domestic customers, said Caleb Henry, analyst at Quilty Analytics.

If access to Russian capabilities is lost due to Western sanctions against the country for its invasion of Ukraine, European and American companies will have to step in quickly to meet demand.

This, however, may not be so easy, given the complexity and challenges of building and launching new rockets.

“There’s always the potential for new vehicles to come online faster, thanks to improved manufacturing techniques, but precedent suggests it will be difficult to achieve high launch rates over the next few years,” said the analyst Henry.

Beck of Rocket Lab said the launch crisis would also apply to small satellites used to image the Earth and perform scientific observations that typically share an orbiting path on a rocket with other satellites.

CRUNCH LAUNCH

Delayed launches can affect satellite internet companies in several ways. There is a risk of losing launch rights if they miss an FCC-mandated deadline, while some companies may not see a return on investment unless their satellite is in orbit.

United Launch Alliance, a joint venture between Boeing Co (BA.N) and Lockheed Martin (LMT.N), is set to replace its Russian engines with those made by Jeff Bezos-backed Blue Origin. Still, Western launch companies still have a long way to go.

However, Amazon’s successful launch deals for Project Kuiper may spur rocket makers to ramp up production, industry experts say.

SpaceX’s Starship launch vehicle is expected to go into mass production sooner and analysts expect it to meet some demand. The company also launches satellites for and operates Starlink.

“In the longer term, launch constraints can be alleviated by Starship. Starship could crush prices in the commercial market if Elon chooses, but my prediction is that he is much more focused on sending humans to Mars,” said Deutsche Bank analyst Edison Yu.

Yu added that “new space companies” such as SpaceX, Rocket Lab and Astra Space are the winners when demand increases and satellite makers around the world are not dependent on the Russian Soyuz rocket.

Earlier this year, OneWeb decided to ditch Russian launch services and signed a deal with rival SpaceX to put its satellites into orbit. Read more

Reporting by Akash Sriram in Bangalore; Editing by Anil D’Silva and Ben Klayman

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