SpaceX is reportedly outsourcing a key component of its Starlink satellite-internet business at a cost of billions of dollars.
STMicroelectronics, a Swiss manufacturing giant, will be paid $2.4 billion to build one million Starlink user terminals, according to Business Insider.
The terminal, which CEO Elon Musk has previously referred to as a “UFO on a stick” contains a phased-array antenna, which allows it to communicate with Starlink’s satellites.
In a beta test, SpaceX is charging $100 a month for internet service and $500 for a starter kit that includes a tripod, a wireless router, and a user terminal – and new information suggests that SpaceX may be paying $2,000 on each terminal.
“The production agreement specifies 1 million terminals at a price of roughly $2,400 each,” the source, who apparently has knowledge of the contract between STMicroelectronics and SpaceX, told Business Insider.
“The original timeline for that production run was end-2019, but it has been extended.”
It was also reportedly agreed that STMicroelectronics would absorb the costs for setting up factories and other nonrecoverable engineering.
This would cost the company millions, and SpaceX would have to repay the money as well as other fees if it could not meet its purchase commitments.
A teardown of the terminal shows many parts branded with STMicroelectronics’ name, including a processor, GPS receiver, and radio-frequency components. Some of these components, according to engineer Ken Keiter, are also custom-made.
SpaceX apparently planned to set up its own user-terminal production line in 2019; it is unclear if that plan is still going ahead following the coronavirus pandemic.
“STM will not comment on who is — or isn’t — a customer or on any agreements we may or may not have with them,” a STMicroelectronics spokesperson told Business Insider.
The Independent has reached out to SpaceX and STMicroelectronics for more information.
The quality of SpaceX’s Starlink internet service remains to be seen . “Expect to see data speeds vary from 50Mb/s to 150Mb/s and latency from 20ms to 40ms over the next several months”, an email seemingly from Starlink to beta testers reads. “There will also be brief periods of no connectivity at all”.
Such an email was an attempt to “lower [the] initial expectations” of prospective users, as issues with internet speed leaves the service slower than users expect at a high cost.
“The Starlink phased-array user terminal … plus mounting tripod and wifi router costs $499 [approximately £383] and the monthly subscription costs $99 [approximately £75]”, the email also states.
However, the initative has seen some successes. Washington Emergency Management division used SpaceX’s Starlink network to set up a free public wifi station in the town of Malden, where 80 per cent of the homes and buildings were destroyed by wildfires in September 2020.
The Native American Hoh Tribe in Washington State has also used Starlink to connect to the internet, giving them access to remote learning and telehealth appointments during the pandemic.
In October, SpaceX launched more Starlink satellites, bringing the total number in low-Earth orbit to 800. It plans to create a network capable of beaming broadband to over 99 per cent of the world.