- SpaceX is building a ground network. The company struck a multiyear deal with Qualcomm to supply network technology for Starlink Mobile, its US mobile service, with a terrestrial network to “complement Starlink’s satellite capabilities” and rollout planned to begin next year. Financial terms were not disclosed.
- It is a big win for Qualcomm. The chipmaker said the deal is its largest 5G initiative to date, with SpaceX using Qualcomm’s Dragonwing cellular infrastructure hardware and software in base stations. SpaceX plans to use the technology to establish tens of thousands of new cell sites.
- Starlink is SpaceX’s profit engine. Starlink accounted for 36% of SpaceX’s revenue in the third quarter and 85% of its operating profit, but its satellite network cannot provide all the voice, video and data coverage that rivals offer on smartphones.
- SpaceX is moving fast into wireless. Last month it agreed to buy a nationwide spectrum portfolio in the 800 MHz band, which sent shares of US carriers reeling, and the Washington Post reported this week it is in talks to acquire EchoStar’s Boost Mobile.
What Happened?
SpaceX announced a deal on Wednesday with Qualcomm to provide key network technology for Elon Musk’s Starlink Mobile service, a challenger to Verizon, AT&T and T-Mobile. “Together with SpaceX, we are building world-leading cellular infrastructure in the United States, advancing 5G today, with an opportunity to lay the foundation for AI-native 6G in the years ahead,” Qualcomm executive vice president Durga Malladi said. SpaceX, which went public in June in the largest IPO on record, is now valued at close to $2 trillion.
Why It Matters?
The deal signals SpaceX is serious about competing head-on with the three national carriers, combining satellites, newly acquired spectrum and a terrestrial network. That raises competitive risk for Verizon, AT&T and T-Mobile. For Qualcomm, best known for modems and radios inside devices, a high-profile infrastructure customer adds weight to its 5G infrastructure push that began in 2020 and follows earlier deals with Verizon, Dish and Vodafone. Tower companies could also benefit, since carriers generally lease space from firms such as American Tower and Crown Castle.
What’s Next?
SpaceX has not announced tower partners or said how many new towers may be needed, so investors will watch for leasing deals with tower operators. The rollout timeline next year, a possible Boost Mobile acquisition and further spectrum purchases will show how quickly Starlink Mobile can scale. Carrier stocks may remain sensitive to each step SpaceX takes into terrestrial wireless.
Affected Tickers and Coins: SPCX, QCOM, VZ, T, TMUS, SATS, AMT, CCI
Source: CNBC
