SpaceX to Build Terrestrial Mobile Network... South Korean Stocks to Benefit? [Weekend Money]
KMW, HFR, SOLiD
OE Solutions, RFHIC, and others
Opportunity for South Korean telecom equipment makers to enter the supply chain
SpaceX, an aerospace company, is moving to build a terrestrial mobile communications network with Qualcomm, and analysts say South Korean telecom equipment makers could benefit.
In a recent report titled "Finding Opportunities in the SpaceX-Qualcomm Deal," Lee Chanyeong, a researcher at Eugene Investment & Securities, said, "I believe this could open up opportunities for South Korean telecom equipment makers to enter a new supply chain." He mentioned KMW, HFR, SOLiD, OE Solutions and RFHIC.
On November 4, SpaceX announced that it had signed a contract with Qualcomm to supply semiconductors and software for terrestrial 5G base stations in the United States. SpaceX is expected to build out its terrestrial network by leasing existing towers and installing new radio equipment. Qualcomm will supply base station ASICs and foundational software, while SpaceX will handle higher-level software and network design.
The parties have not yet decided who will design and integrate the actual base station hardware, but Lee sees SpaceX as the most likely candidate to do so itself. This would align with its vertical integration strategy, under which it has developed Starlink satellites, antennas and communications equipment in-house.
Lee said South Korean telecom equipment makers could also benefit, as they could supply SpaceX or specialized open RAN companies directly, without going through existing major radio access network (RAN) vendors. Of course, whether South Korean companies will see an earnings boost remains to be confirmed.
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"There are few supply track records with SpaceX and Qualcomm, and competition with global suppliers is inevitable," Lee said. "Nevertheless, given the preference for non-Chinese supply chains driven by U.S. telecom equipment security regulations, as well as South Korean companies' track records supplying North American telecom carriers and developing global RAN systems, I believe the door is open for them to enter a new supply chain."
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