When being surveyed by institutions, the China Electronics Technology Group Corporation (CETC) said that at present, the Beidou short message SoC chip has been successfully promoted to China's five major mainstream mobile phone manufacturers and applied to multiple mid-to-high-end smartphones and smartwatches released recently, injecting new momentum into the company's operating efficiency and optimizing its profit structure.

It is understood that satellite communication is one of the core strategic areas for CETC's future development. CETC focuses on developing products for different application scenarios such as Beidou short messages, narrowband voice communication, and broadband satellite internet communication. Currently, the Beidou short message SoC chip has been successfully promoted to China's five major mainstream mobile phone manufacturers and applied to multiple mid-to-high-end smartphones and smartwatches released recently.

With the popularity of Huawei's Mate 60 launched last year, satellite communication is gradually gaining traction. Currently, satellite communication is gradually moving from flagship models to mid-range phones, gradually becoming a standard feature for new smartphones. At Huawei's autumn product launch event in October, another smartphone series fully supporting Beidou satellites was officially released, introducing the Huawei Nova 13 series.

01 What is Satellite Communication?

Satellite communication technology is a form of communication between two or more earth stations that uses artificial earth satellites as relay stations to retransmit radio waves. It originated in the mid-to-late 1990s. Satellite communication boasts numerous advantages, including wide coverage, large communication capacity, high transmission quality, convenient and rapid networking, and easy realization of global seamless connectivity. For a long time, satellite communication has been widely used in professional fields such as government affairs, emergency response, and maritime navigation to meet communication needs in special environments and has not become a mass communication tool.

Based on the satellite orbit altitude, satellites can be roughly divided into low-Earth orbit (LEO), medium-Earth orbit (MEO), and geostationary Earth orbit (GEO) satellites. Generally, GEO satellites are approximately 36,000 kilometers away from Earth. Theoretically, one satellite can cover nearly one-third of the Earth's surface, and three satellites can cover the entire globe except for the polar regions. However, due to the great distance, signal loss is significant. Generally, ground equipment requires large antennas and high-power transmission signals.

MEO satellites primarily refer to Earth satellites with orbital distances ranging from 2,000 to 20,000 kilometers above the Earth's surface. They are non-synchronous satellites and serve as a supplement and extension to terrestrial mobile communication systems, integrating with ground public networks to achieve global personal mobile communication.

LEO satellites are generally located at an altitude of a few hundred to two thousand kilometers above the Earth's surface. In recent years, LEO internet satellites have gained popularity and are being deployed on a large scale. Internet satellites operating in LEO experience minimal signal loss but move relatively faster than ground-based objects, exceeding 7 kilometers per second. Therefore, a constellation of numerous satellites is required for continuous coverage.

Given the increasing scarcity of orbital slots and frequency resources, achieving greater bandwidth through satellite communication technology has become the current mainstream development trend. Currently, satellite developers primarily utilize frequency reuse and multi-beam satellite technology to increase satellite communication capacity to hundreds of Gbps or even Tbps, effectively reducing the cost per unit of satellite bandwidth. Compared to traditional communication satellite systems, high-throughput satellites can achieve wide-area coverage using numerous spot beams, primarily operating in Ku and Ka bands. The Ka-band offers a usable bandwidth of up to 3.5 GHz, exceeding the combined total of existing L, S, C, and Ku bands. Additionally, high-throughput satellites can expand beyond the geostationary orbit (GEO) to include medium-Earth orbit (MEO) and low-Earth orbit (LEO), demonstrating significant upgrades and iterations in technology, frequency band expansion, and orbit development.

02 Gradual Layout of the Industrial Chain with Increased Bets from Various Enterprises

In recent years, amidst the rise of internet video services and the impact of the COVID-19 pandemic on the satellite terminal supply chain, satellite broadcasting and television services, which account for the majority of revenue in the satellite communication service market, have experienced continuous revenue decline and user reduction, while satellite internet services have continued to grow. With the increasing demand and related technological advancements, the satellite communication industry chain has gradually matured, forming a new landscape both domestically and internationally.

In terms of GEO, current systems on the market include those of Intelsat and Inmarsat. China's Tiantong-1 GEO satellite enables mobile communication with direct connectivity between mobile phones and satellites located 36,000 kilometers away. According to the latest data released by China Telecom, Tiantong-1 satellite network has taken the lead in realizing "space-ground integrated" mobile communication capability among domestic and international operators, with a current user base exceeding 180,000.

Regarding MEO constellations, the primary system is currently the O3b constellation with 16 satellites in orbit at an altitude of 8,063 kilometers. Compared to GEO satellites, O3b satellites have lower latency and lower signal-to-noise ratios. However, their bandwidth is limited and they primarily serve as a supplement to terrestrial communication systems. Additionally, MEO constellations have high requirements for ground terminal tracking performance, which is not conducive to promotion.

In the realm of LEO constellations, current systems on the market include Oneweb and Starlink from abroad, while domestic initiatives include Xingwang and the G60 plan. LEO constellations are characterized by the need for a large number of satellites to form a network. For instance, the Starlink constellation comprises over 40,000 satellites. As of June 12, 2024, Starlink had launched 6,611 satellites, with a single satellite development cost of less than $1 million and a launch cost of approximately $500,000. Although technological advancements and economies of scale may gradually reduce these costs, the total cost for manufacturing and launching the entire constellation is expected to reach tens of billions of dollars.

As satellite communication infrastructure gradually improves, various enterprises are increasing their investments in the industry chain. Recently, several enterprises have disclosed relevant progress.

Chengchang Technology leads in providing a complete set of solutions for satellite communication phased array T/R chips for both spaceborne and ground applications in the field of satellite communication. It has been included in the list of core suppliers for major customers, entered mass production in the past two years, and has been continuously delivering as planned, contributing to the company's revenue.

Tongyu Communications specializes in the research and development, production, and sales of communication antennas and radio frequency (RF) devices, including base station antennas, RF devices, and microwave antennas. In addition to traditional communication businesses, the company actively deploys satellite communication businesses based on industry development, market demand, and its technological advantages. Its satellite communication business is primarily undertaken by its wholly-owned subsidiaries, Chengdu Juji Millimeter Wave Technology Co., Ltd., and Tongyu Satellite Communication (Hubei) Co., Ltd. Currently available satellite communication products include marine satellite antennas, ground station antennas, active phased array antennas, T/R components, all of which have been shipped in small batches. The company will disclose revenue from its satellite communication business in its interim report. The currently developed satellite communication products can be applied to mid-to-high-orbit and LEO satellites, with a primary focus on LEO satellites. For LEO satellite ground terminals, the company can provide ground station antennas. Additionally, the company has developed satellite communication terminals, radars, millimeter waves, active phased array antennas, T/R components, and data link terminal products for special application scenarios in satellite communication.

Donghua Software's wholly-owned subsidiary, Donghua Zhigao, develops and produces satellite communication equipment, including handheld Tiantong satellites and Beidou-3 short message handheld devices. The company also continuously develops other satellite communication devices, including walkie-talkies with satellite communication functions, providing specialized equipment for emergency communication.

Haige Communications has become one of the key component suppliers for multiple mobile phone terminals supporting the "direct mobile-to-satellite" function. It has established good cooperative relationships with multiple mainstream mobile phone manufacturers and is a mainstream domestic manufacturer with a full range of Tiantong satellite terminals and chips. The application of satellite internet communication equipment in the passenger vehicle sector is steadily advancing, and breakthroughs have been made in the "vehicle-to-satellite" business. Satellite internet terminal products have become the primary equipment for initial trials by institutional users, and the company has obtained the qualification to develop core technology systems, officially entering the ranks of waveform system developers.

Quectel provides multiple high-performance antenna products, including the satellite antenna YETN001L1A. The company's hundreds of self-developed antenna products are compatible with its extensive range of module products, forming a "module + antenna" supporting service.

VenusTech focuses on satellite internet security, encompassing encryption certification, network attack resilience testing, and supply chain risk management. Leveraging its accumulated cryptographic technology, the company conducts research and prototype development on key technologies for satellite internet network communication link security, including satellite link key distribution management, satellite link multicast communication encryption technology, and satellite communication node dynamic grouping management. It aims to create satellite communication link security protection products to address issues such as the difficulty in key distribution and management due to the non-real-time online status of satellite communication nodes, the inability to transmit unicast and multicast services through traditional secure channels, and increased communication delays caused by link encryption, which affects service smoothness in satellite communication scenarios.

Youka Technology, a wholly-owned subsidiary of Wanma Technology, is actively deploying satellite-terrestrial integrated communication technology and has already participated in formulating industry standards, conducting pre-research on the technical side.

Hua'an Xinchuang has currently planned display system terminals and satellite communication terminal products.

Benefiting from the gradual maturity of the industry chain, domestic mobile phone manufacturers have generally begun to equip their devices with satellite communication functionality.

03 Satellite Internet Enters the Industrialization Stage

With the continuous advancement of aerospace technology and the frequent launch of commercial satellites, major countries around the world have joined the fray, and a comprehensive "race" around satellite internet has begun.

Although Musk has achieved direct connectivity to satellite internet through Starlink, corresponding signal receiving devices are still required on the terminal side, and the market is relatively limited. As the most numerous user terminal for the internet, only by opening up the smartphone market can satellite internet achieve better development.

The entry of satellite communication into the consumer market has become an unstoppable trend. Some analysts believe that with over 5.2 billion mobile phone users globally, even if only a small portion of these users are willing to pay extra for satellite communication services, it represents enormous market potential. Compared to satellite calls, the prospect of providing satellite internet services to remote areas is clearer. In many remote regions, satellite internet is more economically feasible compared to the ground deployment costs of laying optical fibers and building base stations.

The climax of direct mobile-to-satellite connectivity is approaching. However, due to limitations in satellite bandwidth resources and technology, the primary focus is on satellite short messages. But with the introduction of satellite short messages and satellite communication, smartphones may be able to directly connect to the internet in the future. On the other hand, this also places higher requirements on the construction of LEO satellites. Ultimately, LEO satellites require the support of low-cost rocket launch technology. With the support of the capital market, it is expected to promote the development of China's private space industry and low-cost rocket launch technology.