As pandemic abates, war and inflation raise new issues for satellite industry
COVID-19 continues to take a toll on satellite production timelines, even as mask mandates and other pandemic-related restrictions ease worldwide.
Eutelsat, Hughes, Viasat and Ovzon are among operators that have announced fresh satellite delays in their most recent quarterly financial updates.
Two years into the pandemic, these delays underline continuing uncertainty around COVID-19’s lingering effect on the space industry.
The most predominant satellite manufacturing issue remains a shortage of semiconductors, says Northern Sky Research consultant Dallas Kasaboski, amid high demand from crypto and other markets outside of space.
Pandemic-related supply restraints have also seen “launches delayed due to a lack of liquid oxygen, personnel, or other necessities,” he added.
Until the more contagious Omicron variant emerged last year, small satellite maker AAC Clyde Space said its approach to stock management had helped the vertically integrated company avoid getting caught up in major supply chain issues.
“It was not until the third quarter of 2021 that we really saw a material impact in our business due to supply delays,” AAC Clyde Space CEO Luis Gomes said.
“Although some of these were due to parts shortages, the bulk of the delays were due to some key suppliers having to stop or slow down their operations due to COVID outbreaks in their facilities, and staff absences.”
During its Feb. 3 financial results, Viasat said Satellite supply drain a pandemic-related shortage of skilled workers pushed the launch of its ViaSat-3 satellite from the first half of 2022 to “late summer.”
While Viasat still plans to bring the satellite online this year, executive chair Mark Dankberg said there are “uncertainties along the way,” pointing to how just three months earlier it appeared “life was coming back to normal” — before Omicron started spreading across the United States.
While COVID-19 vaccine deployment progress is improving the outlook for skilled labor shortages, the market for satellite components remains highly constrained.
“You might identify parts [on a distributor’s online inventory], and then the next minute they’re gone,” said Rob Rainhart, chief operating officer of U.S.-based RF data reconnaissance specialist HawkEye 360.
“It’s almost like plane seats” for popular destinations.
“We’ve adjusted designs to work around component delays,” Rainhart added, “it’s faster for us to adjust the design in some cases, and work around it, than it is to wait for lead times.”
It will also take some time for the satellite industry to understand how the broader market has been affected by production delays, partly because the pandemic has brought a mix of issues that are difficult to pinpoint.
“[M]any companies faced issues with funding during 2020, and that delayed the placement of several new contracts, delaying start of service for several missions,” Gomes said.
“On the other hand, in some cases, a part shortage will be to blame. Ultimately I would say the market wasn’t dramatically affected by production delays, but COVID’s impact meant there was a slip in the start of service of many new systems by 1 to 2 years.”
Satellite makers had been expecting supply chains to return to normal throughout 2022.
However, Russia’s invasion of Ukraine and resulting international sanctions raise potentially new issues for the industry, including higher energy costs and inflation.
This article originally appeared in the March 2022 issue of SpaceNews magazine.