The space industry is at an inflection point.
It’s not just about shiny rockets and space tourism; it’s a vast landscape of opportunities that could reach a staggering US$1.8 trillion by 2035, according to a recent report from McKinsey.
With increasing investments from governments and private companies, space is set to play a crucial role in tackling some of the pressing challenges we face today.
Ryan Brukardt, a McKinsey senior partner, shares his deep-seated passion for space and reflects on how much our daily lives today are intertwined with space technology – think GPS for your drive, satellite communications for that food delivery, and more.
Brukardt explains that the space economy can be divided into two halves: the backbone, which includes rockets and satellites, and the reach, encompassing the myriad applications that emerge from these technologies.
This separation helps clarify how industries can leverage space-based capabilities.
Understanding the space industry
The first bucket of opportunities is connectivity.
With advanced satellite communications, we can now transmit vast amounts of data with minimal delays, opening the door to seamless video conferencing and more.
The second is mobility – improved location tracking through satellites enables a range of applications, from navigation to tracking shipping containers in real time.
As Brukardt explains, “In the future, we’ll be able to track containers on ships to understand where they are.”
Finally, there’s data derived from space that provides invaluable insights, such as monitoring crop health or water resources, which can revolutionise agriculture.
Another intriguing topic is in-orbit servicing.
The industry faces a choice between upgrading existing satellites or launching new ones, with both options having their pros and cons.
Brukardt observes, “There’s a real concern about these satellites running into each other.”
He also touches on the debate over responsibility for cleaning up space debris – a complex issue that countries and companies are beginning to grapple with.
“Many satellites in what we call low Earth orbit are a little bit self-cleaning,” he explains, as they degrade and burn up in the atmosphere.
Investment in space technology is evolving, too. Brukardt notes that the past decade has seen a dramatic rise in launches, thanks to advancements in technology and a boom in private capital.
“Over the last 10 years, we’ve gone from launching a few times a year globally to launching every other day or so.”
While governments remain key players, the influx of private investment is reshaping the landscape.
Sustainability is a big theme for space
The potential for space to support sustainability goals also comes to the forefront.
Brukardt highlights how space can facilitate access to global knowledge in under-served regions.
He argues, “The ability to provide essential access and then basically full access to the global knowledge base to places in the world that are underserved or unconnected is huge.”
However, the prospect of mining minerals in space has raised ethical questions, especially as more nations and companies venture into this territory.
Brukardt stresses the importance of responsible practices, asking, “Are we cleaning up after ourselves and working well with others?”
Geopolitics is also a significant factor in the space economy.
Just as the space race spurred advancements in the mid-20th century, today’s geopolitical tensions are shaping the landscape of space exploration and utilisation.
“The interest in space… is going to be an integral part of many countries’ national-security constructs,” he said.
However, the space industry isn’t without its challenges. Brukardt identifies regulation as a key issue.
“There is tension between how much innovation versus regulation we want as a global economy.”
Three space-related ASX stocks
Quickstep Holdings (ASX:QHL)
Quickstep is an advanced manufacturer specialising in composite materials and components.
The company primarily serves the aerospace and defence sectors, producing lightweight and durable products that enhance aircraft performance and efficiency.
Quickstep has forged a key partnership with Lockheed Martin for the C-130 program, and has an agreement to supply 100 ship sets from February 2025 to December 2029.
Ongoing discussions for future contracts highlight the strong, forward-looking nature of this collaboration.
In June, the company completed a successful restructuring, which involved reducing the workforce by about 20%.
Quickstep is also planning to sell its Quickstep Aerospace Services (QAS) operation, which handles maintenance, repair, and overhaul (MRO) based in Tullamarine, Victoria.
Electro Optic Systems (ASX:EOS)
EOS specialises in advanced technology solutions for defence and space.
The company designs and manufactures electro-optic and infrared systems for military applications, such as remote weapon and surveillance systems. EOS also provides technology for satellite operations.
In July, EOS announced a new contract worth $9 million with the Australian Defence Force’s Joint Capabilities Division to enhance its space capabilities.
This project aligns with the company’s goal of securing external funding for developing innovative space technologies.
The work is set to be completed in the second half of 2024 and into 2025. This new contract follows another $5 million agreement announced on April 15, which is also expected to be delivered this year.
BrainChip Holdings (ASX:BRN)
While BrainChip is primarily focused on developing neuromorphic computing technology, which mimics the way the human brain works, its Akida processor can process data in real time, making it suitable for applications such as satellite imaging and robotics used in space exploration.
BrainChip’s Akida helps create robots that can work independently in space, supporting important tasks like repairing and maintaining equipment in orbit.
In May, the company announced the successful launch of BrainChip’s Akida AI technology aboard the Optimus-1 spacecraft, allowing robots to perform complex tasks under challenging conditions.
In July, Brainchip announced it was raising approximately $25 million.
The funds will primarily support the commercialisation of the Akida 2.0 technology platform, develop new products using the TENNs algorithm, and enhance ongoing R&D efforts.
