Chip shortage to affect LEO satellites

MANILA, Philippines — The ongoing shortage in semiconductor chip troubling manufacturers around the world may hit producers of low earth orbit (LEO) satellites that telco firms rely on for space-based services.

In an interview with the STAR, PLDT Inc. vice president and head of network design studio Arvin Siena said one of the challenges faced by LEO satellite makers is the delay in the delivery of chips needed to manufacture the space-based equipment.

Manufacturers worldwide are hurting from the chip shortage caused by geopolitical tensions that impact both production and shipment of goods.

Siena said PLDT, for its part, hopes that the cost of LEO terminals go down to support adoption of space-based connectivity. However, production delays on the part of satellite producers could slow this market shift, as they affect the launch of LEO units into space.

“The main challenge now is the cost of specialized LEO terminals. Once the cost for producing these terminals goes down, then market adaptability can progress,” Siena said.

“Delays are happening due to global semiconductor chip shortage and geopolitical situation that affected the production and launching of satellite constellations,” he added.

Telco players like PLDT are trying to catch up with the adaption to LEO satellites to prepare for the entry of Starlink, operated by SpaceX and owned by Elon Musk, in the Philippines.

The internet from space is scheduled to enter the domestic market by December and promises download speed of 200 Mbps with latency of 20 ms.

In the Philippines, the chip shortage has hit not only the efforts of telco providers to adapt LEO technology, but also the sale of Beep cards for railway passengers. In August AF Payments Inc., the supplier of Beep cards to Metro Manila railways, said that it failed to purchase 75,000 stored value tickets for the Metro Rail Transit Line 3.

According to JP Morgan, the chip crisis was triggered initially by the pandemic after it compelled manufacturing hubs, particularly China, to stop production. Afterward, the general shift to digital transactions raised the global demand for chips, especially by automation firms.

Although JP Morgan expects the chip crunch to end soon, it said that the current supply will fall short of providing for all the demand.

“More chips will become available in the second half of the year and the shortage is nearing the end, (but) available chips may not be the right type to satisfy all demand,” JP Morgan said.