SpaceX Ignites New Space Race: Satellites Surpass Semiconductors

Chad Anderson leans back in his chair at Space Capital's Manhattan office, surrounded by scale models of satellites and rockets that tell the old story of space exploration. But he's not interested in those anymore. "Don't compete with SpaceX," he says. "That's not where the real money is."

In an era where data is the new oil, a goldmine lies not beneath our feet but above our heads. The space economy, once the exclusive realm of governments and sci-fi dreams, is poised to outpace the semiconductor industry, promising trillions in value—and it's happening faster than you think.

As founder and managing partner of one of the earliest space-focused venture firms, he's watched countless aerospace startups crash and burn—both literally and figuratively—in their quest to become the next SpaceX. But while entrepreneurs chase Elon Musk's rocket dreams, Anderson sees a different goldmine: not in reaching for the stars, but in the invisible web of data flowing from thousands of satellites above our heads.

Recent projections from the World Economic Forum and McKinsey suggest he might be right. They expect the space economy to hit $1.8 trillion by 2035, surpassing even the semiconductor industry's projected $1 trillion valuation by 2030. The surprise? Rocket launches, despite capturing public imagination, represent just 9% of this astronomical figure.

"We're tracking over 100 launch companies that have raised more than $30 billion," Anderson says. "Only two of them are actually flying. That's because it's technically very challenging, and the economics are low margins."

What Musk and SpaceX have really done is build the railroad to space. Since 2009, their Falcon 9 rocket has slashed launch costs by 95%—from $65,000 per kilogram to $1,500—thanks to reusable components and transparent pricing. With over 5,000 Starlink satellites already orbiting Earth and more than 300 launches as of June 2024, SpaceX has effectively become the first orbital utility company.

The company's political connections haven't hurt either. Musk's occasional alignment with figures like Donald Trump has led to speculation about potential regulatory benefits under certain administrations. "Given Musk's influence, SpaceX could benefit from a lighter regulatory touch," Anderson notes. "But they're not the only ones who'll profit. A favorable administration could accelerate the entire industry's growth."

Yet Anderson insists the real opportunity lies elsewhere. "Ninety percent of the opportunity is in satellites," he says, "and it's not just in investing in the hardware. It's thinking about how that signal is being accessed and distributed here on Earth, because Earth is where the customers are."

The explosion in satellite deployment has created an unexpected solution to one of technology's most pressing problems: data shortage for AI training. "There's a firehose of information being beamed down from thousands of satellites," Anderson explains. "The U.S. government and commercial companies are desperate for ways to analyze this data."

While most online data consists of incomplete sentences or information inadequate for advancing AI models, satellites and sensors observing Earth generate enormous amounts of high-quality data. "Applying AI to geospatial datasets is probably one of the biggest opportunities we see," Anderson reveals. "Businesses can leverage this data not just for training AI models, but for generating valuable insights through generative AI technology."

Another frontier is augmented reality. "Imagine walking past a coffee shop and receiving a personalized offer through your AR glasses," Anderson explains. "You need centimeter-level accuracy to know whether you're walking past a Starbucks or a Target. That's not possible without next-generation satellite systems." His firm is investing in companies putting up new GPS satellites to help augment the existing system.

"Expertise in high-value manufacturing like semiconductors is directly applicable to manufacturing satellites," Anderson adds. "But even more important is the ability to scale. A lot of companies are good at building a few satellites. Going from that to manufacturing at scale is not trivial."

The global race is intensifying. While U.S. companies have captured 50% of the $300 billion in private space investment over the past decade, China isn't far behind at 25%. Japan is making aggressive moves into emerging sectors, and other nations are scrambling to catch up.

The risks remain substantial. Space ventures often require long time horizons before yielding returns. The industry depends heavily on government policies, which can shift with each administration. Environmental concerns are mounting too—the European Space Agency tracks approximately 9,000 tons of space debris, a number that grows with each launch.

But for those who can navigate these challenges, the opportunities seem limitless. "When you don't have to optimize everything for size and weight, when failure becomes an acceptable part of the process—that's when traditional industries will jump in," Anderson predicts. "Mining, construction, manufacturing—they're all coming to space."

Looking toward the future, Anderson's vision extends beyond the current market. "The question isn't whether space will become the next trillion-dollar industry—it's who will capture the value when it does."

Note: This article is a slightly modified translation of the original Korean articles by reporter Sejin Kim using generative artificial intelligence (AI). The Miilk not only covers generative AI, but also experiments with using generative AI solutions to create actual content.

We look forward to hearing your thoughts on this emerging technology and its potential impact, please drop us a line at sejin@themiilk.com.

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