Shortages of Components and Critical Minerals, Losing the Battle for AI Resources: Mega-Constellation Dreams for Low Earth Orbit Satellites Hit Setbacks, Raising Fears of Industry Consolidation

Amazon plans to deploy more than 5,000 satellites in orbit, while Blue Origin has proposed a constellation of 5,400 satellites. Chinese companies have filed plans for even larger networks, and SpaceX founder Elon Musk has even discussed constellations on the scale of one million satellites.

According to foreign media reports, this unprecedented race to deploy low Earth orbit (LEO) satellites is running headlong into shortages of specialized components and materials, strained supplier capacity, and fierce competition for resources with the booming artificial intelligence (AI) industry. Estimates suggest that the nearly 19,000 satellites currently operating in LEO could be joined by another 70,000 over the next few years.

Component Bottlenecks: Suppliers Hesitate Due to High Requirements and Low Profit Margins

Steve Jordan Tomasweski, Vice President of Space Systems at the Aerospace Industries Association (AIA), participated in a supply chain analysis conducted in collaboration with PwC.

Published in March 2026, the 54-page report interviewed approximately 30 industry professionals and identified nine categories of critical components facing supply bottlenecks, including valves, actuators, switchgear, and transformers.

Tomasweski said companies are being forced to seek solutions that involve taking on additional risks. These include switching to components that are not rated for space applications or waiting as long as a year for certain critical valves.

The report also revealed that some suppliers are reluctant to accept space-related orders because of their complex requirements and low profit margins. For example, one long-established supplier withdrew from a rebidding process for composite-overwrapped pressure vessels because the project would have consumed approximately one-third of the company's engineering workforce while contributing only a low single-digit percentage of its revenue.

Critical Minerals at the Mercy of Geopolitics, Raising Supply Chain Disruption Risks

Regarding raw materials, Carla Filotico, a partner at European consulting firm Novaspace, is particularly concerned about gallium nitride (GaN) and germanium, which are used in high-efficiency solar cells.

She noted that aluminum consumption in the satellite industry is negligible compared with global production capacity. However, China controls approximately 98% of global GaN production capacity, leaving European and American companies extremely vulnerable. Any export restrictions could trigger a supply chain crisis in the space industry at any time.

In addition, PwC partner Doug Anderson said shipping disruptions in the Strait of Hormuz caused by the US-Iran conflict have directly affected supplies of aluminum and helium.

Filotico estimates that resource pressures will be most severe over the next five years, with a new peak in satellite constellation launches expected before 2030.

Consider a mega-constellation, for example. Equipping each satellite with just one or two solar panel assemblies could require between 10,000 and 20,000 panels. These panels would also need to be replaced every four to five years, creating enormous demand.

AI Outbids the Space Industry for Resources, Prompting Calls for Priority Allocation

The rise of AI data centers is further complicating the supply chain situation.

Tomasweski pointed out that AI companies are purchasing large quantities of switchgear and transformers, resulting in order backlogs that can stretch for years.

He explained the imbalance: a space company might purchase only 10 units at a time, while a data center operator might order 10,000 units in a single purchase. Even with rapidly growing demand from the space industry, its order volumes are still too small to change how these power equipment supplies are allocated.

To address the problem, he advocated granting the space industry government-authorized priority access, allowing it to move ahead of data centers in resource allocation.

Gurpartap Sandhoo, Director of the US Space Development Agency (SDA), also acknowledged in September 2026 that production capacity and quality control for optical communications hardware and focal plane arrays remain major challenges.

Source of Information: TechNews