Satellite manufacturing and launch services: 2024 in review

Christopher Baugh

Welcome to the Analysys Mason podcast. My name is Christopher Baugh, partner at Analysys Mason and head of the Space research practice at the company.

Today, we'll be looking back at the satellite manufacturing and launch markets in 2024 and doing a full year in review: high points, low points, and everything in between.

Today, I am joined by my colleague, Dallas Kasaboski. Dallas, welcome.

Dallas Kasaboski

Hi, Chris. Thanks for having me.

Christopher Baugh

Dallas is a Principal Analyst at Analysys Mason and also head of our Space Infrastructure programme, which covers anything happening in space with infrastructure, including satellite manufacturing and launching.

So Dallas, let's look backwards and maybe focus on one segment first because this could cover a lot of content.

I want to focus purely on launch from a standing point. How successful was 2024? Was it better or worse than previous years? And where is the momentum going with launch going into 2025?

Dallas Kasaboski

So launch last year, 2024, was fairly successful. We had more successful launches than the previous year, 221 in 2023 versus 264 in 2024. The big news, of course, SpaceX launched more than ever, they are still responsible for 50% of all satellites launched into space. They were grounded a little bit for a time, but that hardly slowed them down. There are lots of developments, test flights and contracts for Starship as well. And that's planning to be moved into 2025.

Outside of the US and SpaceX, China, there's a lot of activity. China continues to be a reliable launcher over the long march, but there are a lot of Chinese vehicles also in development. They're focusing on rapid cadence and methane-based and reusable things like this.

Lots of other vehicles are in development, many of them flew. Ariane 6, Falcon Centaur, ISRO's GSLV, MHI H3, Firefly Alpha, all of these launched. Many of the emerging players were delayed. ABL Space Systems actually left the commercial launch market, they've moved over to Missile Defense. Isar Aerospace and a few other companies, even Rocket Lab who wanted to launch Neutron by the end of 2024, they're all delayed until 2025.

So overall, more launches, more success, lots of pushes by China, SpaceX and some of these second-generation heavy launchers. But a lot of the emerging players are still developing their vehicle and service.

Christopher Baugh

OK, thanks, Dallas. So it seems, like most things in space, delays are the norm. It would appear we're on the cusp with launch, 2025 being a pretty impactful year going forward with New Glenn, Neutron, SpaceX and others. Are we on the cusp of a very big year for launch, would you say?

Dallas Kasaboski

I think so. There are three key areas of focus to watch out for. Starship is the big one, literally. Everybody is very excited about Starship. It's the largest rocket ever. It can serve the highest mass possible. There are a lot of questions right now as to how that's going to affect pricing and availability of launch. Launch has always been a bottleneck to space. We've always been able to build satellites faster than launch them. There's always been a restriction there, so there's a hope that Starship helps with that.

The next is all those other heavy-class vehicles I mentioned Ariane 6, Vulcan, etc. They have launched and they are ramping up how often they can launch. The hope is that they will also continue to compete and serve the growing demand.

There are a lot of emerging players who are very close to test flights, or they've already done a test flight, they're moving to commercial services. We've seen a lot of them over the past year and spoken with a lot of them at conferences like Space Tech Expo. The opportunity is not only will we have greater availability of launch, more options, and the ability to get to orbit quicker and start generating revenue faster, but the more competition there is, the more pricing pressure will happen, and the more pricing options will be available. It's the hope of continuing to ease the gap between satellite and space and between satellite pricing and terrestrial pricing. So it's an exciting year for that.

Launch successes in 2024

Christopher Baugh

Yes, it's interesting because there's never been a lack of demand for launch. It's just the supply. So we're easing that bottleneck, and it seems like we're on the cusp of some great momentum there.

Let's turn to the other side, which is satellite manufacturing. There have been a lot of very interesting, turbulent, transformational times in that industry, even in the last year. It seems like it’s two tales: one is GEO, which is in an interesting transitional state, and then non-GEO, which is just gangbusters. Could you talk through both GEO and non-GEO? What did we see in 2024?

Dallas Kasaboski

So, GEO satellite communications and satellite orbit have been the standard driving aspect in previous decades, previous years. GEO is slowing down. Anybody involved in this market has seen the number of orders dropping. Last year, unfortunately, was the lowest we've had in some time. Seven GEO communication orders were made compared with 10, 11 and 12 in the last 3 years before that.

So in general GEO orders are coming down. But we are seeing a bit of a transformation here both from a demand and a supply aspect, there is a push to smaller form factors called small GEOs. Rather than three ton satellites down to one and a half or even less.

And we had a milestone. Astranis was able to launch four satellites on a single rocket, which happened last month. And they raised over USD200 million toward their new Omega line. So in GEO, there's a lot of curiosity about new platforms. But in the meantime, it means quite a bit of a slowdown for that market. Orders are down. Order decisions are taking longer to make. It's a very challenged market because of non-GEO. Non-GEO continues to drive the activity in the market from commercial to government military. We're seeing a lot of announcements being made, Space Force continues space development for the SDA constellation, issuing contracts, Starlink, Xona Space here in Nevada. A lot of constellations are expanding in size, announcing more satellites. Telesat received half of its funding for the Lightspeed constellation; Amazon are expanding their facilities. Most of satellite manufacturing activity these days is focused on non-GEO. Even in the cases where we're not talking about constellations, there is some kind of impact from constellations on the rest of manufacturing in terms of scaling up, dropping prices and increasing speed.

Christopher Baugh

Thank you. It's interesting, the growth story is non-GEO. Constellations are kind of a catch-all for many things and many applications, but many of the things you just mentioned focused on satellite communications, connecting people, places, and things. Is that the heart of the opportunity? Is that all that we're focused on with where that 2024 growth has come from? Or are there other applications as well?

Dallas Kasaboski

It's certainly a lot of the opportunity. You're seeing these announcements happening all the time with constellations bridging the divide between space and ground. You're hearing announcements from Apple and Globalstar, Starlink and T-Mobile. You're seeing a lot of those communications announcements. But those same improvements in satellite manufacturing are filtering over to other applications. Earth observation is a big one that's continuing. There are Earth observation satellites continuing to be built and contracts going out. We're also seeing emerging markets such as the lunar market.

There's a strong push from governments; there are over 50 countries signed on to the Artemis Accords trying to go back to the moon, and there are a lot of commercial players trying to offer lunar communications, navigation, and other kinds of systems. MinoSpace raised $137 million for EO last year. Intuitive Machines is on contract with NASA. So outside of communications we're seeing those improvements in manufacturing and launch expand the capabilities and interest in other kinds of constellations and other kinds of applications. Earth observation, lunar, commercial navigation, and new navigational systems such as Space Force. They're very interested in upgrading, going beyond GPS. Even things like in-orbit service. So the idea that satellites could be launched to serve and extend the lifetime of other satellites. We're seeing a lot of companies raising funding for that. So communications are probably the loudest, most prevalent news story, and all of that is diversifying into other applications as well.

Challenges in 2024

Christopher Baugh

OK, thanks. A lot of interesting developments around the diversity of applications. So we've heard a lot of very positive developments, launch, non-GEO. Let's focus on what in 2024 maybe didn't go so well, or is not going so well going into 2025. Can you give some examples of areas that didn't meet the mark last year going into the new year?

Dallas Kasaboski

Yes. As we mentioned earlier a lot of emerging launch vehicles were slated to have their first launch in 2024 and hopefully open commercial operations in 2025. Many of them were delayed and didn't meet their launch window. So emerging launch is one area that continues to be delayed. Science missions are another one. NASA has either delayed or cancelled missions entirely. We had a couple of small sats going toward Mars, the AOS Grey Sea missions to study the atmosphere. There are a lot of science missions that are being cancelled for budgetary reasons. Another big one that was important for an emerging technology was the OSAM-1 mission. NASA had a mission where they wanted to improve on in-orbit services. Unfortunately, it went over budget, over timeline, and it was ultimately cancelled. Another one that was public on launch was Boeing's Starliner. After years of development, delays and charges, they launched. They brought astronauts to space. Unfortunately, it was not deemed the right technology at the right time to return that astronaut. That astronaut has had to stay up in orbit until SpaceX brings them down. So we're seeing some fallbacks in emerging launch, some notable government military missions delayed, and probably some investment has fallen short of expectations as well, but that doesn't usually make headlines.

Strategies for success

Christopher Baugh

Yes, of course. Great points. Now, amidst all of these opportunity challenges, many of the companies need to have an effective strategy for targeting these opportunities. So what will separate winning and losing going forward? Can you give some insights and maybe some free advisory here? What will move the needle between winning and losing in this space, both manufacturing and launch, over the next year?

Dallas Kasaboski

Yes, that's a great question. So, government-military. You have to have a government-military strategy. Even if you are very commercially focused or you're developing a commercial product, the majority of funding, regulatory initiatives, and industry support is coming or driven by government and military programmes. They have deep pockets and they're very interested in new services, and new technologies. So there must be some kind of way of catering to the government military market within your development.

The next is technology, which is what most of this industry is focused on. It's a very technology-focused industry. The lead times and the development times need to be assumed to be longer than you think. We see a lot of ambitious expectations for technology to be ready, commercialisation and operation to be deployed. Look at emerging launch and commercial launch; they thought they'd be launching in 2024 and then commercially available in 2025, but now we're moving yet another year forward. So, prepare for longer lead times. But of course, most who are not in the satellite space are looking for shorter exit windows. So, a strategy is to try to prepare your entire organisation and your roadmap for these long lead times but try to prepare some kind of milestone exit windows that can get you that early investment.

Then finally, diversify your portfolio. There's a lot of push right now for control within these various markets, within manufacturing, launch, supply chain, and logistics. Generally, the more control or the more merging and acquisitions, vertical and horizontal integration you have the more control you have on pricing and timing. And you're more reliable. So if you diversify your portfolio you not only cater to a wider adjustable market but you generally have a much greater control as to how you develop your products and services.

Looking ahead to 2025

Christopher Baugh

So, just to reiterate there. Target the government military markets. I wholly agree on that, especially for early-stage companies. Expect longer lead times, everything in space goes to the right as we know. And diversification. We have advised a number of companies in a variety of ways with that as a going-in strategy and then much more depth. All right last question. We've looked backwards at 2024. Let's look forward now to 2025. For launch and for manufacturing, what is your prognosis for the next 12 months?

Dallas Kasaboski

So in launch, the bottleneck is easing. As we said, many heavy vehicles are operational now, and these emerging smaller vehicles are getting ready to launch. Starship will fly again soon. So, for launch, we're expecting new supply, and that's going to disrupt business models. Timing, pricing, availability, and competitive aspects are going to change, and they're going to be impacted by all of these new players. So even though we had some delays in 2024, we also had a lot of milestones reached. 2025 is going to be a big change in how we see the launch business going forward. In manufacturing, constellations still drive the industry. Whether you are building a constellation or you're building a single geostationary or lunar platform, the interest, investment, and technology processing developments in building constellations are factoring out everywhere. Scaling up production and changing pricing dynamics. It's very important for players to keep track of that and flow with that trend rather than being left behind.

Christopher Baugh

Thank you, Dallas. Well said. A lot to look forward to in 2025 and onwards. It's a really interesting year ahead. That concludes our podcast. There is more content on this topic on the Analysys Mason website. You'll find this on the research page and also within the space programmes, this programme specifically, which is Space Infrastructure. To automatically receive future episodes, please subscribe to the Analysys Mason podcast. Thank you, Dallas, and thank you for listening.