2025 Week 12 | Signs of Splintering in Aerospace Provider Client-Base & Another Tech Billionaire Wants to Build Up a Rocket Company

I. Tracking

1. F-35 could be the canary in the ‘space mine’, as traditional allies consider American diplomatic reliability under the Trump Party

Portugal, Switzerland and Canada have in the past week each announced reviewing whether or not to purchase and add the F-35 to their fleets. Canada’s reaction is expected, given the continued, very public aggressiveness the Trump White House has used to pursue its foreign policy. For the defense industry that develops expensive, high-tech systems, this is a very nervous moment for a few reasons.

First, this will hurt the private-sector manufacturer (Lockheed Martin), as sales will drop, much like lower sales impact almost any business.

But second and more significantly, it will also severely hurt the cost management efforts of the US Department of Defense, and profoundly impacts the strength of any non-American partner working with the US in combat.

Costs-wise, as the F-35 fleet grew, so did the economies of scale along with the customer base. For the US, that meant that Canada, Portugal, and its myriad of other allies also supported the financing for that program. Some would argue that those were very small contributions compared to the US government, but given the very public ‘cost saving’ measures the current administration is implementing, it’s still embarrassing to be losing financial partners that would help lower costs that much more. Allies using the F-35 also saved costs by automatically improving interoperability, operational planning, and general standardization, either within the US military or across allied operations. There was less of a need for complex exercises to discover different employment tactics or capabilities, how to schedule tankers for different type of aircraft; the F-35 was a common expectation, with a known spectrum of needs (even though are fairly varied already between the A, B, and C models). All of these costs savings could be pitched to potential customers.

While this augurs tangible elements that demonstrate the loss of US leadership capabilities (see our article about how building alliances is a lot harder than trash-talking them), it also is a repeating signal for future systems developers that straddle the line between defense and commercial applications.

By and large, this includes most space systems.

What this may mean is that sharing resources and capabilities will become less and less capable. Economies borne out of sharing to develop an exquisite but expensive system will most likely make some projects more expensive for the primary customer. Countries that can will most likely choose to fund their own satellites to do the same things as American satellites already do. As these redundant capabilities come online, the customer base for these satellite services will also shrink, since they will invariably pay for their national systems. This will increase costs for the few customers that remain, namely governments. It’s a good day for non-American satellite providers, but it’s not indicative of a healthy space market, and it’s a bad day for costs in general.

Of course, F-35s are not satellites, but they are a system used for national defense. F-35s are the most visible discussion taking place right now because the F-35 itself has struggled with its PR. But other signs are there too, from the relief expressed by European leaders of Ariane 6’s launch, to nations questioning how much intelligence they want to share with their American partners (intelligence sometimes gathered using space assets).

Ontario has already scrapped a $100 million Starlink contract, and space developers who are counting on European and other allied funds should be wary. The EU, UK, Canada and others, are more and more being pushed to consider buying non-American, which in turn, will hurt American providers. For any startup in the US space industry, the message is becoming more and more hard to avoid: dollars will be in government, and if you don't get that government contract, your other customers may not keep you afloat. Satellites didn't used to follow the same business model as bullets, warships or fighter jets, but geopolitical challenges are pushing it toward that business model.

2. Again, A Tech Billionaire Wants to Build a Rocket Company, But Which Previous One Will He Emulate

Much like PayPal’s success financed the initial development of SpaceX, and Amazon.com has been responsible for Blue Origin’s 25+ years of expenditures to this day, Alphabet (parent of Google) is the next tech company that could see its success financing another rocket startup: Relativity Space. So far, it’s unknown how many shares of Alphabet (if any) Eric Schmidt sold to complete his ‘significant investment’ in the rocket maker, allowing him to take a controlling stake and become CEO. What is important for other investors and the company’s startup though, is that this certainly is a massive safety-net. With Eric Schmidt’s control and direct involvement, the company is likely to continue to receive some financial assistance to sustain its operations, regardless of successfully completing the traditional startup funding rounds. This development is creating an obvious perception that the only way for a rocket company to get to space is to have a billionaire individual back you. It also begs the question of what tech companies see in launch vehicles – a question that will need to be answered a different day.

What remains to be seen is how long Eric Schmidt will be willing to support Relativity Space if no other customers or investors line up. Fortunately for him, the other billionaires before him have cast a wide spectrum for expectations. On one side, Elon Musk famously recalled that if the fourth launch of the Falcon 1 failed after the first three had already failed, SpaceX would have shuttered. This was in 2008, six years after the company was founded. On the other edge of the spectrum is Jeff Bezos, who founded Blue Origin in 2000, and continues to use his fortune to bankroll most of the company to this day (New Shepard and Blue Engines probably help fund around one fifth of the company according to the latest estimates). This means Relativity Space could get 25+ of life in its sails a-la Blue Origin, or may need to prove results within the next few launches, and fast, before its new billionaire-investor decides to pull the plug.

Of course, the context of development is very different to SpaceX. In 2008, SpaceX was not just trying to disrupt the market dominated by prime contractors, but had a wide-margin to undercut the existing market. Today, the market is much more complex, and extremely competitive (SpaceX today does not need to make a profit on 100% of its launches).

The market Relativity Space is trying to compete in is in line with the one provided by SpaceX’s Falcon 9 and ArianeGroup’s Ariane 6, and close to what Rocket Lab is aiming to provide with its developing Neutron rocket. Simply put, it’s a competitive field. But the startup does have one key aspect that may make it a prime contender for partnership, acquisition, or independent success: its manufacturing plan. Relativity Space’s plan to develop a 3-D printed rocket, and outsourcing many of the components it hasn’t mastered yet, may see it rein in costs that have plagued many other rocket developers. If it succeeds, it will undoubtedly be able to undercut Ariane 6.

Unfortunately for Eric Schmidt, Ariane 6 is a European rocket, and given the current White House’s open hostility to its allies, Europe may prefer to pay top euro to stay away from American launch vehicles. At that point, it’s just a race between SpaceX, and all the other launch startups in America. Billionaire or not, Eric Schmidt and Jeff Bezos have more in common with those competitive startups than Elon Musk and SpaceX… for now.

(Of note, Alphabet has already made a small investment in a space launch company, having invested in the US-based Ukrainian space startup Promin back in 2022).

II. Quote of the Week

“I cannot do that. Nobody can do it. Not even SpaceX. They do it at a loss.”

Marino Fragnito, CCO & Launch Services Director, Avio (Developer of the Vega C), regarding the need to continue to lower launch prices to difficult-to-sustain levels for launch providers in order to attract customer demand.

III. Immediate Awareness

1 Telespazio has contracted Thales Alenia Space to build four navigation satellites for ESA’s Moonlight constellation, widening the spread of ESA contractors across the continent.

2 A Norwegian report critical of Sweden’s analysis has warned that rocket launches from Sweden’s Esrange Space Centre over Norwegian airspace could cost Norway over $150 million per launch, creating tensions between the two Nordic countries vying for launch vehicles to their respective spaceports.

3 Further heating up the commercial space-based SAR competition is Japanese iQPS (Q-shu Pioneers of Space, Inc.) that just launched its second of 36 satellites meant to provide SAR imagery to customers.

4 'Last-mile’ provider D-Orbit’s 17th Orbital Transfer Vehicle mission has just launched in SpaceX's TR-13, continuing a trend that allows satellites to be delivered to a specific, desired orbit without having to pay for an individual launch vehicle.

5 Another European startup has released its first images from its thermal imaging spacecraft, providing more privately-sourced imaging in what was a government-dominated domain but is today becoming an ever more privatized sector for those same government dollars.

6 SpaceX successfully completed its third launch in 13 hours, coming after a few setbacks this year, demonstrating a new record for the company that may be reaching its current maximum cadence.

7 Japanese startup ElevationSpace has become Isar Aerospace's first Asian customer, booking a 2026 launch for its AOBA spacecraft, and completing Isar’s launch manifest until mid-2027.