More Delays at AST SpaceMobile

Taking a Look at AST SpaceMobile's (ASTS) Quarterly Results.

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AST Delays Block 1 BlueBird Launch

AST SpaceMobile (ASTS), in its Q4 earnings announcement after market closure on Monday, detailed the latest schedule for the launch of its first-generation commercial satellites. Originally slated for a 2023 launch aboard a Falcon 9 rocket, the deployment of the company’s initial five 700-square-foot Block 1 BlueBird (BB) satellites has faced several delays. These setbacks have moved the expected transportation of the satellites from the assembly facilities to a SpaceX launch site to between July and August 2024, pushing the launch into the third quarter of the year. The company cited supply chain issues and problems with two suppliers as the primary reasons for the delay. These issues have not only impacted the timeline but also strained investor patience, as the launch date was first moved to the first quarter of 2024, then to the second quarter, and now further delayed.

ASTS CEO Abel Avellan attributed the postponements to delays in integration and testing work, necessitated by complications with suppliers. To mitigate such issues in the future, Avellan announced that the company has taken strategic steps. This includes acquiring a license to manufacture one of the critical components internally and planning to replace another supplier with the company’s own design. These moves are part of ASTS’ broader strategy to reduce dependency on external suppliers and streamline its production process.

Furthermore, despite the current delays, ASTS has already secured a launch contract for its next-generation 2,400-square-foot Block 2 BB satellites. This next set of satellites is slated for a launch window stretching from December 2024 to March 2025. This advancement suggests a forward-looking approach by the company despite the challenges with its first-generation satellites.

The repeated postponements have understandably led to investor frustration, reflected in the declining stock prices of ASTS. Investors are closely watching how the company navigates these challenges, particularly its ability to manage supply chain issues and improve its production capabilities moving forward.

TSM & ASTS Collaboration

In more positive news, a week before a business update was given, ASTS has made a significant advancement in its mission to enhance global satellite communications, announcing the initiation of the tape-out phase for its Application-Specific Integrated Circuit (ASIC), in collaboration with Taiwan Semiconductor Manufacturing (TSM). This phase is pivotal in the semiconductor manufacturing process, signifying the transition from the design stage to actual production.

Chairman and CEO Abel Avellan underscored the importance of this development, linking it directly to the company's broader goals. "As we advance toward the orbital launch of our Block 1 BB satellites in the upcoming months, we are simultaneously making steady progress on the technology underlying our Block 2 satellites," Avellan said. He highlighted that the ASIC is central to the Block 2 program, positioning the company to enter a new era of satellite communications that promises to deliver reliable connectivity to people everywhere, regardless of their location.

ASTS has been deeply invested in research and development (R&D) and engineering efforts for the past four years, dedicating $45M to the development of the AST5000 ASIC. This innovation features a novel, low-power architecture designed to facilitate a high-bandwidth, space-based satellite network. Notably, this network aims to be directly accessible by everyday smartphones, catering to both commercial and government users. The company has secured agreements with over 40 mobile network operators worldwide, covering more than 2 billion subscribers, underscoring the vast potential impact of its technology.

While the transition to the tape-out phase is a crucial milestone for the company, it's not expected to immediately contribute to revenue generation. However, this step is instrumental in the process of bringing the company's semiconductor designs to fruition. Despite shares experiencing a 40% decline year to date, partly due to a dilutive public share offering earlier this year to raise cash, the announcement of this significant progress has sparked some optimism, potentially positioning the company's shares for a rebound. This development represents a tangible step forward in their journey toward revolutionizing satellite communications, offering investors a glimpse into the company's future potential.