Sealand: Initiates "Recommended" Rating on Satellite Internet Terminals and Applications; Terminal Manufacturing and Cost Reduction Drive Application Expansion

Sealand released a research report initiating coverage with a "Recommended" rating on the satellite internet terminals and applications industry. Currently, China's low-earth-orbit (LEO) satellite internet remains in the early industrialization stage, with constellation deployment, terminal finalization, ground network construction, and application validation advancing in parallel, leaving substantial room for improvement before full-scale commercial deployment. On the demand side, satellite internet can fill coverage gaps in terrestrial networks across scenarios such as maritime, aviation, emergency response, energy, transportation, remote areas, and mass mobile communications. Broadband terminals, narrowband dedicated terminals, direct-to-handset connectivity, ground stations, and core chips all present differentiated demand and sizable potential market space. As network coverage and capacity continue to improve, terminal costs decline, and business licenses and commercial models gradually mature, the industry is expected to progressively transition from current small-batch trial validation toward volume procurement and commercial operations, with revenue elasticity on the terminal and application side poised for sustained release. Sealand's key views are as follows: The global satellite broadband market is developing rapidly, and Connectivity has become SpaceX's primary source of revenue and profit According to a report published by the Satellite Industry Association (SIA) in May 2026, global satellite broadband subscriptions grew 62% year-over-year in 2025 to over 10 million, with satellite broadband revenue up approximately 16% year-over-year. Leveraging continuous constellation deployment and commercial service expansion, Starlink's Connectivity revenue reached US$11.387 billion in 2025, up 49.85% year-over-year, accounting for 60.98% of SpaceX's total revenue; segment operating profit reached US$4.423 billion, up 120.49% year-over-year. In 2026H1, Connectivity further achieved revenue of US$7.548 billion and operating profit of US$2.844 billion. Satellite internet is gradually evolving from a network-construction-driven investment phase toward a scaled commercial business centered on connectivity services. Starlink's constellation deployment and commercial applications advance in tandem; terminal demand need not wait for full constellation completion Starlink began satellite deployment in 2019 and commenced commercial operations in 2020. From 2023 to 2025, the number of satellites in orbit increased from 5,248 to 9,391, up 78.94%; over the same period, subscription service lines grew from 2.3 million to 8.9 million (subscription service line definition: SpaceX counts users by independent subscription service lines at period-end, typically associated with one or a group of terminals, covering residential, roaming, and commercial subscription packages, but excluding separately contracted managed enterprise and government customers. One line can be shared by multiple people, and the same customer may subscribe to multiple lines), up 287.0%. As of 2026Q2, broadband and Mobile satellites in orbit exceeded 10,200, with subscription service lines reaching 12 million. Starlink's development demonstrates that once a constellation achieves a certain level of regional coverage, available capacity, ground network, and business access conditions, commercial services can gradually commence, with user and terminal deployment continuing to expand as subsequent constellation buildout proceeds. The professional market is growing significantly faster than the consumer market, with high-value applications such as aviation and maritime continuing to expand In 2025, Starlink Enterprise & Government revenue was US$4.179 billion, accounting for 36.7% of Connectivity revenue; in 2026Q2, revenue was US$1.806 billion, up 108.3% year-over-year, significantly higher than the 44.39% growth rate of the Consumer business over the same period. In 2025, more than 1,400 commercial aircraft completed Starlink equipment installation, the maritime business connected over 150,000 vessels, and the company further expanded into scenarios such as agriculture, energy, enterprise/government, and government emergency communications. The professional market has higher requirements for terminal performance, reliability, and mobile communication capabilities, with terminal prices and service value significantly higher than consumer-grade products, and is expected to become an important growth direction for satellite broadband commercialization. The LEO satellite terminal market is expected to grow rapidly, with sustained expansion in demand for terminal manufacturing and core components According to Global Market Insights forecasts, the global LEO satellite terminal market is expected to grow from US$9 billion in 2025 to US$35.1 billion in 2035, with a CAGR of approximately 13.9% from 2026 to 2035; broadband terminals accounted for 64.5% in 2025, corresponding to a market size of approximately US$5.8 billion, and are expected to maintain a CAGR of 11.5% through 2035. STMicroelectronics estimates that the global serviceable market for LEO broadband electronic devices will grow from US$650 million in 2025 to US$2.9 billion in 2030, covering spaceborne, gateway, and user terminal segments. Starlink has taken the lead in achieving scaled terminal manufacturing, producing and selling 3.9 million customer devices in 2024. As LEO constellations continue to deploy and broadband applications expand, new terminal deployments, professional customer procurement, and replacement of existing equipment are expected to drive sustained market growth, with demand for core components such as phased-array RF chips, beamforming, and baseband expected to expand in tandem. Terminal scale manufacturing capability continues to improve, with phased-array and core chips constituting important value segments Starlink terminals have achieved scaled production, producing and selling 3.9 million customer devices in 2024; in 2026H1, SpaceX product revenue was US$841 million, all attributable to the Connectivity business. Terminal value is mainly concentrated in semiconductors and phased-array-related electronic systems. TechInsights' teardown of an early Starlink Internet Kit showed that integrated circuits accounted for 57.01% of the total equipment manufacturing cost; domestic industry estimates indicate that for some ground-based phased-array terminals, T/R chip costs can account for approximately 40% of the entire unit. SpaceX continues to reduce costs through custom chips, hardware integration, and scale manufacturing; as of the end of March 2026, the average manufacturing cost of the Starlink Kit had decreased by approximately 59% compared with 2022. As terminal costs decline and application scale expands, core segments such as phased-array RF chips, beamforming, baseband processing, and high-frequency boards are expected to continue benefiting, with chip integration level, mass-production yield, and cost control capability becoming key to competition in the industry chain. Risk factors: constellation deployment and launch progress falling short of expectations; regional continuous service and network capacity falling short of expectations; terminal cost reduction and core chip industrialization falling short of expectations; industry demand growth falling short of expectations; changes in business licenses, frequency-orbit coordination, and regulatory policies; intensifying industry competition and decline in SpaceX's market share; large constellation capital investment with long payback periods, and the domestic commercial model not yet fully validated.