Liu Kaijie, from E Fund Management's Index Research and Development Department, stated in a recent interview with The Paper's Chief Connect program that China's satellite internet industry chain has gradually entered a stage of accelerated order release. Liu noted the satellite industry is transitioning from a 'technical verification period' to a 'mass production scale-up period,' with China planning to launch over 1,000 satellites in 2026—a multiple-fold increase year-over-year—and some segment orders already booked out 1-2 years. The assessment comes as SpaceX prepares what Liu described as the largest IPO in history at a valuation of $1.8 trillion USD, which he said could provide strong catalytic support for space development. China's satellite constellation buildout is accelerating under frequency-orbit resource constraints and declining manufacturing costs.
Three Forces Drive Industry Growth
Liu identified three core factors driving the satellite industry's upward trajectory: resource constraints, technological breakthroughs, and accelerated development momentum. On resource constraints, Liu explained that frequency-orbit resources under the International Telecommunication Union follow a 'first-come, first-served' rule, with limited capacity in low Earth orbit. Globally, over 500,000 satellites have been filed, and China added 203,000 new filings by the end of 2025, which must be deployed within specified timeframes to secure the resources. On technological progress, Liu noted that single satellite manufacturing costs have cumulatively declined nearly 50% compared to 2023, and recoverable rocket technology is expected to achieve engineering implementation, potentially reducing launch costs by an additional 30-50%. Regarding capital support, Liu stated that the National Commercial Space Development Fund's first phase of 20 billion yuan has been established, with local supporting funds exceeding 10 billion yuan in scale. The Science and Technology Innovation Board has also introduced customized listing rules for commercial space enterprises to further facilitate financing channels.
Liu emphasized that 2026 represents a particularly noteworthy inflection point, with China planning to launch over 1,000 satellites—a multiple-fold year-over-year increase—and orders already scheduled through 2028. He added that SpaceX's imminent IPO at a $1.8 trillion USD valuation will be the largest in history, and that roadshow disclosures about further launch cost reductions and accelerated space computing progress will provide strong catalytic support for the sector.
Manufacturing Segment Dominates Current Profit Distribution
Liu stated that as of the first quarter of 2026, China's satellite communication industry is in the early stage of a high-growth period, having completed the transition from 'experimental verification' to 'large-scale implementation.' He cited three substantive markers: accelerated capacity release, a shift in order models from 'customized' to 'standardized,' and mature industrial chain coordination, with upstream component suppliers delivering aerospace-grade products in volume and downstream launch services achieving 'flight-scheduled' operations. Liu explained that this transition has fundamentally changed valuation logic—during the technical verification period, the market primarily used price-to-sales ratios to assess technical capabilities and R&D progress, whereas in the mass production phase, with visible order releases, the market can now apply price-to-earnings valuations based on projected 2030 industry scale and market share.
Regarding profit distribution across the value chain, Liu offered a phased assessment. In the medium term, he said segments with resource scarcity—such as communication channel operations and rocket launch services—should command larger profit margins. In the long term, he expects the application end to dominate due to near-zero marginal costs, similar to the previous internet revolution. However, Liu emphasized that for an extended period ahead, the upstream materials and midstream manufacturing segments will account for the largest absolute profit volumes, driven by the current phase of rapid satellite launch growth and manufacturing scale expansion. He added that the industry has not yet reached a stage requiring strict segment selection, as all segments are progressing through '0-to-1' and '1-to-10' breakthroughs during this acceleration phase, presenting investment opportunities across the board.
Three Enterprise Categories Positioned to Benefit Directly
Liu noted that while manufacturing contributes the majority of current profit volume, high launch costs remain a core bottleneck constraining commercial space constellation buildout. He stated that the Long March 10B and Zhuque-3 rockets are both advancing toward recovery verification. Once the technology achieves engineering implementation, the transmission path will be clear: declining launch costs will reduce constellation construction costs, accelerate network buildout, lower service prices, trigger user scale expansion, and ultimately drive demand growth across the entire value chain.
Liu identified three categories of enterprises positioned to benefit directly. The first category comprises companies mastering core recoverable rocket technology, including excellent private enterprises. The second category includes suppliers of core rocket components and materials, such as rocket engine suppliers, composite material and superalloy suppliers, and metal 3D printing companies. The third category encompasses launch service and recovery support enterprises, including offshore recovery command and control vessels and rocket fuel suppliers.
For enterprises benefiting indirectly, Liu highlighted satellite manufacturing and downstream application segments. After launch cost reductions, constellation construction will accelerate, significantly increasing orders for satellite manufacturers. Service price declines will trigger user scale expansion, bringing high-speed demand growth for ground terminal manufacturers and application service providers. Liu cautioned that investors must monitor potential 'inflection signals' while tracking industry progress timelines. He stated that expectation failures—such as key technological breakthroughs failing or business models not proving viable—represent the greatest risks, and emphasized the need to distinguish factors impacting core logic from marginal disturbances. Liu noted that the impact of a single test failure is often minimal and quickly superseded by new catalysts.
FAQ
What is China's satellite launch target for 2026?
China plans to launch over 1,000 satellites in 2026, representing a multiple-fold increase compared to the previous year, according to Liu Kaijie from E Fund Management. Some industry segment orders are already booked out 1-2 years, with certain orders scheduled through 2028.
How much has satellite manufacturing cost declined?
Single satellite manufacturing costs have cumulatively declined nearly 50% compared to 2023, according to Liu Kaijie. Additionally, recoverable rocket technology is expected to achieve engineering implementation, potentially reducing launch costs by an additional 30-50%.
