Betting on Space Industry
Hanwha Group will acquire a Korean satellite company to make its space business a new growth engine.
Hanwha Aerospace, an aerospace affiliate of Hanwha Group, announced on Jan. 13 that it will acquire a stake in Satrec Initiative, a small satellite company in Korea. It plans to invest about 109 billion won within the first half of 2021 to secure a 30 percent stake. Hanwha Aerospace is expected to become the largest shareholder of Satrec Iniitiative, but will not interfere in the management of the company.
Satrec Iniitiative is the first company in Korea specializing in satellites. It was established in 1999 by researchers from KAIST's Satellite Research Center who had participated in developing Korea's first satellite Kitsat-1. The company started with 25 employees and now has 400 employees.
The company is the only company in Korea to directly develop and manufacture core satellite components such as satellite bodies, ground systems, and electronic optical payloads. "At present, Satrec Initiative is one of the two largest companies in the global small satellite manufacturing sector, the other being Airbus which recently acquired SSTL of the United Kingdom,” said Park Sung-dong, the founder of Satrec Initiative. The company has exported satellites to Malaysia, Singapore, Turkey, the United Arab Emirates and Spain. It posted 70.2 billion won in sales and 9.2 billion won in operating profit in 2019, with overseas sales accounting for 60 percent of its total sales.
The hottest issue in the global space industry is the space internet business using low-orbital satellites. It requires building 5th- or 6th-generation mobile communication networks by putting satellites at an altitude of 200 km to 1,500 km from the ground. Unlike other Internet networks, space internet networks can provide fast-speed internet services in underdeveloped countries, rural areas where people have little access to the internet, mountains, oceans and the air. Ultimately, it can eliminate the information divide, a social problem caused by areas with poor internet service infrastructure.
Currently, competition is intensifying among private companies to preempt satellite technology. SpaceX, which was founded by Tesla CEO Elon Musk, Amazon, Apple, and OneWeb of the United Kingdom, are engaged in a fierce competition for the low-orbit satellite communication business. Market experts forecast that the size of the market for satellite communication antennas will reach 50 trillion won by 2026.
Hanwha has joined the competition. Prior to Hanwha Aerospace, Hanwha Systems set up Hanwha Pager in June 2020 after acquiring Pager Solution, a British venture for satellite communication antenna technology. Through the acquisition, Hanwha Systems secured the source technology for electronic beam steering antenna (ESA) systems for low-orbit satellite communications.
In December 2020, Hanwha Systems forged a strategic partnership with Kymeta, an ESA technology company in the U.S. It invested US$30 million in the U.S. partner to secure an exclusive right to sell Kymeta satellite antennas in Korea starting in 2021. The two companies plan to jointly develop next-generation electronic satellite communication antennas.
"Our strategy is to enhance our capabilities in the low-orbit satellite communication antenna business by combining Kymeta’s meta structure-based antenna technology, which is highly practical and marketable, and Hanwha Pager’s high-performance antenna technology based on semiconductors," said an official of Hanwha System
Experts agree that Hanwha Group's aviation and defense affiliates will be able to generate synergies in domestic and foreign satellite businesses. Hanwha Group boosted its aerospace capabilities by taking over Samsung Techwin through a deal with Samsung Group in 2015. The company’s name was changed to Hanwha Aerospace. Hanwha Group turned Hanwha Aerospace into a holding company dedicated to the aviation business and placed Hanwha Defense and Hanwha Systems under Hanwha Aerospace.
Hanwha Aerospace is tasked with developing a liquid rocket engine for the Korea Space Launch Vehicle-2 (KSLV-2). Hanwha Systems is engaged in the development of production technology for components for synthetic aperture radars (SARs), electron optical equipment, and infrared ray devices which go into satellites and the ground system business such as satellite antennas and telecommunication terminals.
"We expect Hanwha Aerospace and Hanwha Systems to create synergies with Satrec Initiative in the mid- to long-term," the official said.