WASHINGTON — The United States has a vibrant space industry that is poised to become both an economic engine and a national security asset. At the same time, U.S. space companies are receiving unprecedented amounts of foreign investment and are the targets of corporate and state-sponsored espionage, a new report warns, calling on the U.S. government to take action.
China is by far the most concerning threat to U.S. dominance in the space technology arena, cautions a report from the Air Force Research Laboratory and the Defense Innovation Unit titled “State of the Space Industrial Base: Threats, Challenges and Actions.”
The May 30 report, written by Thomas Cooley and Col. Eric Felt, of AFRL; and Col. Steven Butow, of DIU, summarizes the conclusions of a March seminar held in Silicon Valley.
The report paints an alarming picture of the state of play in the burgeoning space industry. The most concerning trends are China’s stealth investments in U.S companies, and the country’s coordinated public-private efforts to dominate markets and advance space technology ahead of the United States.
The theft of intellectual property from American companies is rampant, the report says. The Chinese are penetrating American companies to “obtain and further exploit U.S. technology or to influence those companies in a direction that serves China’s domestic space priorities.”
A common tactic by the Chinese is to make investments in the U.S. space industry via front companies and multi-level offshore accounts, says the report. Another is predatory pricing of space capabilities or elements of space supply chains to control the market. The country also uses state-sponsored venture capital to keep tabs on U.S. technology.
The AFRL-DIU seminar concluded that the U.S. space industry is vulnerable and the government must protect it from “manipulation, distortion, penetration and domination by our adversaries, allies and neutral countries … The breadth and depth of Chinese malfeasance with regard not only to our technology, but also to our larger economy and our nation is significant and intentional.”
The accelerating space race carries high economic stakes, the report says, including dominance of the cislunar domain and its economic exploitation through space manufacturing, space power and resource extraction. “The foundation for a sustainable space economy, such as cislunar infrastructure, strategically depends on close collaboration with national commercial capabilities and the maintenance of a strong space industrial base.”
On what the government should do specifically, the report suggests it could help the space industry get easier access to diverse sources of capital. There should be “more flexible U.S.-led markets for space capabilities that spread the risk, increase the pool of investors and establishes our nation’s leadership role in setting the international rules for space products and services,” says the report.
The government also should change procurement and licensing processes and other regulations to reduce delays and micromanagement of the space industrial base’s ability to deliver next generation space capabilities. Other actions the government should take, says the report, include stepping up counterintelligence efforts and helping U.S. companies secure patents to “stop the hemorrhaging of technology.” It should also create an “Export Bank “or similar financial options for developing countries to finance goods and services as a means of aiding American companies in the global space market.
“We require a unified and comprehensive national strategy that builds and continually refreshes a strong space industrial base,” the report recommends. “The dominant position that Huawei has created in 5G communications is an example of the type of challenge that the Chinese space strategy poses for the nation and the U.S. space industrial base.”
China’s industrial base is already positioned to dominate the mass market for space-based solar-power systems for planned proliferated low Earth orbit constellations, the report says. One of China’s most ambitious space efforts is in launch. “To date, the United States has been the driver behind increased interest in launch innovation but foreign government-supported launch programs are a serious threat to the development and maintenance of a robust, competitive, open market.”
The AFRL-DIU report highlighted three major areas where China is cornering key markets with strategic implications for space:
Germanium wafer production Refined germanium wafers are the basis for nearly 100 percent of the high-efficiency, radiation hardened solar cells that power satellites today. China accounts for over 70 percent of the world’s germanium mining, refining and production while the United States contributes nothing to mining and only 2.5 percent to the world’s refined germanium output. Manufacturing of satellite solar panels is now impossible without the Chinese controlled raw materials.
Solar cell production The annual worldwide market for high-efficiency solar cells and panels for space applications has been approximately 750,000 watts. With industry plans for mega-constellations, forecasted demand for space solar power exceeds 2,000,000 watts annually. These cells for spacecraft are made using a metal organic chemical vapor deposition reactor. China became the world leader in MOCVD capacity in 2012.
Commercial launch services The China Aerospace Science and Industry Corporation’s Kuaizhou-1A, solid-propellant launch vehicle is the baseline for the new Kuaizhou-11 rocket. This launcher will compete head-on with commercial solutions offered in the United States and other western countries. CASIC, one of China’s largest state-owned defense contractors, will provide the Kuaizhou-11 through its subsidiary Expace at a highly discounted rate of $5,000 per kilogram to LEO — five times less expensive than comparable launch capabilities.