(Yicai) July 31 -- Deploying artificial intelligence data processing capacity directly onto satellites, known as "space-based computing," has become a hot topic in the AI era, with executives from rocket, satellite, chip, and energy systems companies targeting the area as a potential new growth driver for the commercial space sector.

There are several reasons for eyeing space-based computing, said Li Ye, secretary-general of the Shanghai Industrial Technology Innovation Promotion Association. The first is the scarcity of orbital slots, with only about 100,000 usable low-Earth-orbit spots worldwide, he noted, adding that China has hundreds, while Starlink operates more than 10,000.

Since slots are allocated on a first-come, first-served basis, early deployment amounts to a strategic reserve, Li pointed out. This also gives satellites whose value would otherwise be limited to remote sensing a new way to generate revenue, he stressed.

Second, space-based computing is not meant to replace the ground one but complement it, providing backup in situations such as natural disasters or network disruptions where ground systems may fail, he added. Deserts, open ocean, unpopulated areas, and mountainous, forested terrain, regions that ground-based stations cannot reach, also have computing needs, he said.

The final driver is energy, Li noted, adding that power consumption and the availability of green electricity are hard constraints for data centers on the ground, with this bottleneck especially acute in Shanghai given the city's limited supply of renewable energy.

The new growth targets come against the policy and market backdrop in China. Last December, China National Space Administration set up a dedicated commercial space department and later issued an action plan calling for the sector to achieve high-quality development by next year. 

Overseas, SpaceX went public in New York on June 12, raising about USD75 billion in what was the largest initial public offering in history. Its prospectus showed Starlink's global user base had reached nearly 9 million, with relevant revenue rising 50 percent to about USD11.4 billion last year from the previous year, making it the firm's only profitable unit.

Shanghai should develop space-based computing, according to Li. The Shanghai Academy of Spaceflight Technology is one of China's two primary spacecraft design institutes, with the city having accumulated talent and supply chain resources that make it, alongside Beijing, one of the few Chinese cities with a full commercial space industrial ecosystem, he stressed.

However, the bigger question than technology is who will pay for space-based computing and how to bill it, Li noted. The industry has not settled on a paying customer base or a pricing model, he said, adding that the token-based billing used for ground-based cloud computing may not translate directly to space computing, which mixes short bursts, intermittent tasks, and long-duration workloads.

Xie Hongjun, who heads the space-based computing business at rocket maker i-Space, used several recent landslides to illustrate the company's approach. A radar satellite capable of on-board processing could analyze terrain changes on the spot, issuing warnings potentially hours earlier than the conventional approach of transmitting raw data to the ground first for processing, a meaningful advantage in areas that typically lack ground communications infrastructure and have no alternative, he said.

I-Space will prioritize this kind of irreplaceable use case to enter the market, he pointed out.

China should extend the "computing voucher" and "model voucher" subsidy programs used to support ground-based AI infrastructure to the early, high-cost phase of space-based computing, while also advancing rules for cross-border data governance, according to Li.

Commercial space customers may increasingly come from the Middle East or Southeast Asia, he said, stressing that how data is cleaned, processed, and returned across different countries' regulatory regimes needs to be resolved before it is ever put into orbit.

China already has a proof-of-concept for the technology. Last November, a team from commercial space company ADA Space, also known as Chengdu Guoxing Aerospace Technology, deployed Alibaba Group's Qwen3 large language model onto the Three-Body Computing Constellation, its space computing project jointly developed with Zhejiang Lab, completing an end-to-end in-orbit inference task in under two minutes.

ADA Space's broader Star-Compute plan envisions scaling the constellation to 2,800 computing satellites.

The challenges facing satellite platforms center on power supply and heat dissipation, where the heat-dissipation density of computing satellites has reached about ten times that of conventional satellites, said Xue Xiaobu, chairman of satellite maker Qingdao Shanghe Feisuo Space Technology.

On the chip side, radiation levels in orbit can run tens to hundreds of times higher than on the ground, with high-energy particles capable of flipping bits and causing computing errors or even destroying chips outright, noted Zhang Yalin, founder and chief operating officer of AI chipmaker Enflame. The more advanced process nodes needed for competitive performance tend to be more vulnerable to radiation, meaning radiation-hardened design has to be paired with system redundancy and software-level error correction, he stressed.

Outside of China's pursuit of this path, SpaceX plans to integrate data-processing modules into its next-generation Starlink satellites, while Google unveiled Project Suncatcher earlier this year, aiming to launch a prototype satellite carrying tensor processing unit chips by next year. The two US companies are taking different technical routes but face the same underlying challenge of chip reliability under radiation.

The cost of reaching orbit remains critical. The Long March 10B rocket completed China's first controlled recovery of a first-stage booster using a net-capture system at sea on July 10, which was a world first for this recovery method, while also making China the second country after the United States to master reusable rocket tech for large payloads.

A launch cost of around USD200 per kilogram is likely the key threshold for the broad commercialization of space-based computing, according to several institutions, with multiple expecting the level to be reached between 2030 and 2035. SpaceX's Falcon 9 costs around USD3,000 per kg to launch, while China's next-gen reusable rockets are targeting about CNY20,000 (USD2,960) per kg in the near term.

A traditional ton-class communications satellite costs CNY200 million to CNY300 million (USD28 million to USD42 million) to build, a price point that can support a constellation of a few dozen satellites but is incompatible with the tens-of-thousands-of-satellite constellations discussed in China, Xue said.

The industry's near-term target is to bring the cost of a single satellite down to the tens of millions of yuan, with a longer-term goal in the single-digit millions, Xue noted. Reaching that will require breaking away from the traditional aerospace supply chain and instead borrowing from the electric vehicle industry's playbook, standardizing satellite subsystems, he added.

Thermal management accounts for close to 30 percent of the total cost of building a computing satellite, compared with 10 to 15 percent for a conventional satellite, Zhang pointed out.

Unlike communications, navigation, and remote sensing, the space-based computing business is trying to sell not connectivity but computing power, several executives said. This means China's commercial space industry is attempting to open up a new demand-side market, but what will ultimately determine whether the approach works is not whether satellites can perform computing in orbit, but who is willing to keep paying for it, they added.

Editor: Martin Kadiev