If a report from research firm Jefferies is correct, SpaceX’s (SpaceX) Starlink satellite internet constellation, which is currently facing a pre-order backlog caused in part by a semiconductor shortage, could see an improvement in the future. According to a report released yesterday by Jefferies, the shortage, which has also impacted other industries such as consumer electronics and automobiles, is beginning to ease, but the firm remains cautious, believing that the situation will not normalize before 2023.
Starlink has struggled to meet client pre-orders for its equipment due to the shortage and high demand for its service. Customers who place preorders will receive a user terminal (dish), a WiFi router, and other peripherals to connect to the circling satellites and access the Internet.
After telling clients that their hardware will be shipped by the end of the year, Starlink has had to postpone countless deliveries until next year. According to a new report from research firm Jefferies, the semiconductor scarcity is beginning to ease. The firm’s findings are based on information provided by an American distributor and a British shop. Microcontroller supplies have steadied, and pricing and lead times are in the “stable-to-higher” range, according to the report.
A central processing unit (CPU) built by STMicroelectronics with a processor layout designed by British design house Arm Ltd is used in Starlink’s user terminal, which allows users to connect to the network. It makes use of four Cortex A53 CPU cores from Arm, which are designed to be power efficient.
In a research note cited by Seeking Alpha, Jefferies mentioned STM. The firm claims that while delays for STMicro and Texas Instruments products have decreased, demand for power management circuits remains high.
Seeking Alpha explains the (paywalled) comments as:
Shortages relating to STMicroelectronics (NYSE: STM) and Texas Instruments (NASDAQ: TXN) were viewed as “pain points” earlier this year, but those delays have subsided, though broad-based demand for power management integrated circuits continues. Additionally, Analog Devices (ADI) and Infineon could start to see shortages, while supplies from Xilinx (XLNX) “remain in very short supply.”
The firm also comments on the overall semiconductor industry as it believes that high backlogs will last throughout 2022, which will also result in higher prices and backlogs for the chip firms.
According to research firm TrendForce, Starlink’s user terminal also uses Kingston memory modules, and both NAND and DRAM memory prices are expected to fall in the first quarter of next year. The lack of a terminal teardown prevents accurate insight into the supply constraints of its component suppliers.
Due to the shortage, SpaceX has introduced a new user terminal and router to customers, emphasizing the upgraded equipment’s faster production times. According to the most recent information, Starlink’s pre-order backlog stands at over 750,000 orders, and the company plans to aggressively scale up operations in the future.
It has already requested permission from the Federal Communications Commission (FCC) to deploy up to five million terminals in the United States, as well as revealing plans to manufacture “millions” of terminals in a new factory in Texas. Starlink is also battling the FCC to allow it to launch internet satellites using SpaceX’s Starship next-generation launch vehicle platform, which is currently awaiting its first orbital launch in Boca Chica, Texas. Starship will allow Starlink to quickly deploy a large number of satellites for a constellation of 42,000 satellites.