The world's largest iPhone maker is about to send its operations into outer space. Two low-Earth orbit satellite prototypes manufactured by Hon Hai Precision Industry, also known as Foxconn, took off on Saturday aboard a SpaceX rocket from Vandenberg Air Force Base in southern California. The launch of the low-Earth orbit satellite marks a critical moment for the Taiwanese electronics maker as it moves into new territory, a shift that has become more urgent as some of its older businesses, such as smartphones and laptops, struggle. Foxconn's goal is to prove that it has the satellite technology to meet the growing demand for space communications.
Elon Musk's Space Exploration Technologies has built and launched more than 5,000 low-Earth orbit satellites for its Starlink constellation, while Foxconn is betting it will build satellites primarily for corporate and government customers.
Developed jointly by Foxconn and Taiwan's National Central University, the satellites are about the size of a backpack and weigh about 9 kilograms (20 pounds) each, and can carry cameras, communications equipment and other equipment. They orbit the Earth every 96 minutes at an altitude of 520 kilometers (323 miles).
Since taking over from founder Terry Gou in 2019, Foxconn Chairman Liu Yonghao has been looking for ways to diversify his development - focusing on electric vehicles, digital health and robotics, as well as artificial intelligence, semiconductors and communications satellite technology.
Liu Yonghao said in an interview with Bloomberg Businessweek: "I need to find some businesses that will allow the company to maintain growth in the next 10 or 15 years."
Foxconn, the world's third-largest private company after Walmart and Amazon, is expected to see its revenue drop about 6% this year to NT$6.2 trillion (about US$192 billion), according to estimates from Bloomberg News. Apple needs millions of iPhones every quarter and frequently updates models. Two out of every three iPhones in the world are produced by Foxconn. Customers can order LEO satellites at long intervals, so the business is much less predictable.
As Foxconn develops its satellite business, government orders can provide it with a certain degree of security. Taiwan is developing plans to launch its first low-Earth orbit communications satellite, part of a strategy to develop space-based alternatives to the undersea cables that provide most of the island’s internet connectivity.
Foxconn's electric vehicle business will be another line of support because they require real-time communications technology, said Jason Wang, an analyst at Taipei-based MasterLink Securities. Because there needs to be a solution for cars. If they want to export this business, they need to at least build the infrastructure in Taiwan to demonstrate the technology.
The company's background in electronics and know-how gained from making smartphones, gaming consoles and other devices help achieve this goal.
"Taiwan is very good at manufacturing a variety of different electronic commercial products," said Shiang-yu Wang, a researcher at the Institute of Astronomy and Astrophysics of Academia Sinica in Taipei. "These companies can easily pivot to 'space'."