Failure Seen as Heavy Blow to Space Business

The Yomiuri Shimbun

16:32 JST, March 8, 2023

The failure of the H3 rocket launch will likely deal a significant blow to Japan’s space business as the demand for private satellite launches is increasing worldwide.

Mitsubishi Heavy Industries Ltd. has received an order to launch a satellite of Inmarsat Inc., a major British mobile satellite communications company, using the H3. The rocket was expected to become the backbone of Japan’s space business in the future.

The current mainstay H-2A rocket boasts a high success rate of approximately 98%, but it is a struggle to secure orders for commercial satellites due to high launch costs and other factors. Most of the H-2A’s payloads are Japanese satellites.

Meanwhile, SpaceX of the United States, which has cut costs through such means as reusing rocket bodies, dominates the market with 61 launches of its Falcon 9 rocket in the past year.

Mitsubishi Heavy Industries sought to participate in the satellite launch business by reducing the cost and achieving a greater launch capacity with the H3. The Falcon 9 costs about $67 million (about ¥9 billion) to launch, and the H-2A about ¥10 billion, but Mitsubishi Heavy Industries aims to launch the H3 rocket for about ¥5 billion.

According to a report by researchers at the Center for Astrophysics / Harvard & Smithsonian, there were a record 186 rocket launches worldwide in 2022, doubling in five years from the 90 launches in 2017.

The satellite-related business is also booming, with some estimates suggesting it will grow from about $16 billion (about ¥2.16 trillion) in 2021 to about $27 billion (about ¥3.65 trillion) by the end of the 2020s.

Beginning in 2022, when Russia invaded Ukraine, Russia stopped launching satellites from Western countries in response to economic sanctions, resulting in a severe rocket shortage. This international situation also provided a favorable tailwind for the H3.

Mitsubishi Heavy Industries, which developed the H3, is also likely to feel the impact of the failed launch.

Of the company’s fiscal 2021 sales of ¥3.86 trillion, sales of rockets and other products in the aerospace, defense and space division account for 15.6%. The division includes a number of businesses that were expected to be future earnings powerhouses for Mitsubishi Heavy.

However, the company decided to pull out of the Mitsubishi SpaceJet business last month after repeated design changes and delivery delays due to a series of problems with the jetliner. Mitsubishi Heavy Industries had invested ¥1 trillion in developing the plane.

When this is combined with the spate of failures in its space business, the company’s future growth potential is increasingly uncertain.

Mitsubishi Heavy Industries has made no comment on the failed launch, but the stock market reacted sensitively to the news. At about 11 a.m. Tuesday, when the launch failure hit the headlines, its share price fell to ¥4,934 on the Tokyo Stock Exchange, down 3.19% from the closing price on June 6.