Amazon(AMZN.US) challenges SpaceX with emerging ambitions Apple(AAPL.US) becomes a key variable

Zhitong Caijing APP learned that last Friday, according to reports, the U.S. e-commerce and cloud computing giant Amazon (AMZN.US) was in talks to acquire the satellite communications operator Globalstar (GSAT.US), and hopes to dramatically strengthen its commercial internet satellite business after the fierce rivalry in the commercial space sector with SpaceX, the space exploration giant founded and led by Musk. As a result, on last Friday Globalstar’s share price surged by more than 20% on the spot.

What global investors should pay attention to is that although this matter in itself is already noteworthy enough, there is also a major variable at present with a current market cap of roughly $3.8 trillion. That is Apple Inc. (AAPL.US), the leading U.S. consumer electronics company behind popular consumer electronics products such as iPhone and iPad.

The iPhone smartphone brand maker holds about 20% of the shares of Globalstar mentioned above, which means that any acquisition of Globalstar would require exclusive negotiations with Apple. Media reports say that after a lengthy period of negotiations, the parties involved with Globalstar are still consulting on some complex issues related to a potential acquisition deal.

Swallowing Globalstar is an important foundation for Amazon’s “peak showdown” with SpaceX in the commercial space sector

Globalstar (Globalstar) is essentially not a “typical satellite internet company,” but a mobile satellite services (MSS) operator: it operates low-earth-orbit satellites and global ground gateways, offering voice, data, asset tracking, and satellite IoT services to retail, enterprise, and government customers. At the same time, it also owns highly valuable spectrum assets, including the U.S. Band 53/n53 and ground spectrum rights in multiple countries. Overall, what Globalstar sells is not just a “satellite system in the sky,” but an entire suite of satellite-communications-level infrastructure—“satellite communications network + ground gateways + spectrum licenses + industry application scenarios.”

Amazon urgently needs to acquire this satellite communications operator. The core reason is not that Globalstar’s actual scale is the largest, but because it can help Amazon avoid many years of detours. Amazon is in negotiations to acquire Globalstar for about $9 billion, aiming to accelerate its low-Earth-orbit satellite business and directly benchmark SpaceX’s satellite communications service—Starlink (i.e., the famous “Starlink”).

For Amazon, the most valuable thing is not a single asset, but a combination of three things: first, an existing low-earth-orbit satellite communications network and global gateway infrastructure; second, scarce spectrum resources that can be commercialized, especially Band 53/n53; third, proven commercial satellite communications deployment capabilities that have been validated by Apple, governments, and enterprise customers. This is like buying back “licenses, infrastructure, customers, and application scenarios” all at once, rather than burning money from scratch to build everything.

SpaceX/Starlink’s biggest advantage is not simply having a large number of satellites, but the fact that it has already formed a closed loop of scale, users, channels, and an application ecosystem. Starlink currently has more than 9,500 satellites and more than 38k users; meanwhile, Amazon’s Amazon Leo‌ (formerly Project Kuiper), though planned at about 3,200 satellites, is still accelerating deployment and has previously faced timeline pressure from the FCC due to progress issues. Acquiring Globalstar cannot immediately close the broadband satellite quantity gap between Amazon and Starlink, but it can, across the tracks of direct-to-device connectivity, private wireless, enterprise/government scenarios, and connectivity in remote areas, help Amazon rapidly fill key shortcomings in an extremely short time.

Therefore, Globalstar is arguably very crucial to Amazon’s commercial space ambitions—this is a key “space map” for this cloud computing and e-commerce giant. However, it is absolutely not a single decisive move that is “alone sufficient to defeat Starlink,” but one of the core pieces that will most accelerate the pursuit and catch-up speed. Its most important strategic value lies in enabling Amazon to upgrade from “focusing solely on satellite broadband” to a “hybrid connectivity platform driven by satellite broadband + direct-to-device systems + spectrum”—significantly improving its position within the global commercial space industry chain, with the potential to move closer to SpaceX at an accelerated pace. That said, this deal also has a huge variable—Apple.

SpaceX is considering going public in June (around Musk’s birthday), and the financing amount could be as high as $50 billion, or become the largest IPO in history. The estimated valuation could reach an astonishing $20k, exceeding Tesla’s current roughly $13k. And “a three-in-one” of Tesla, SpaceX, and xAI has forged the “Musk super business empire,” which may be the final destiny of the three companies founded by Musk.

As Musk has recently frequently released positive progress regarding space AI data centers, large-scale energy storage, artificial intelligence, fully autonomous driving (FSD), Robotaxi, and the revolutionary “Optimus” humanoid robot, the world’s richest man appears to be stringing together “commercial space systems + Starlink satellite communications + space AI computing system/AI large models + energy/energy storage + electric vehicles + autonomous driving + robot manufacturing” into a financing-friendly and clearly explainable “super vertical integrated asset chain,” so as to amplify leverage both in capital markets and on the industrial side. Being able to unify “AI, communications, space, energy, and robots”—the world’s hottest investment themes or narratives—into a “full-stack super frontier technology infrastructure platform” would undoubtedly help with the pricing and upward valuation of an ultra-large-scale SpaceX IPO, as well as with pre- and mid-term IPO roadshows and investor composition.

If Amazon ultimately acquires Globalstar, what would it mean for Apple?

Apple previously obtained this stake through a $400 million equity investment in Globalstar and an $1.1 billion infrastructure payment, and used it to help Globalstar build its satellite communications network.

According to information, Apple uses Globalstar’s satellites for the Emergency SOS feature on the iPhone 14 series (and subsequent models), as well as related features on Apple Watch. This feature allows users to quickly place calls and send text messages to emergency service organizations; it also notifies emergency contacts of the user’s location through the user’s cellular mobile network service. The feature was first launched in the U.S. market, and then quickly rolled out worldwide. Although many iPhone users (and emergency responders) have praised this feature, Apple has not charged for the service to date. The company originally said it would begin charging after a short period of time.

Assuming the transaction between Amazon and Globalstar goes smoothly, Julia Ostian, a senior Wall Street analyst at Seeking Alpha—an investment research platform that is long-term based—said Amazon may launch its own direct-to-device wireless satellite communications service, perhaps as an exclusive benefit for Prime subscription users.

“I personally expect they’ll include it in some service tier within Amazon Prime subscription, or they might integrate it with AWS and even Alexa to enable remote-area network and communications connectivity,” Ostian said. “By leveraging its massive existing customer base, Amazon then has a better opportunity to fiercely compete with Starlink—continually eroding Starlink’s market share—which already leads by a wide margin in user adoption and penetration rate.”

Julian Lin, head of the “Best Of Breed Growth Stocks” portfolio, also holds a similar view. “I fully expect Amazon to roll out its own smart phone service, because it basically aligns with its obvious long-term goal—namely, swallowing everything in the global consumer ecosystem,” Lin said. “Of course, this could bring some complicated issues, such as how it would affect the business relationship between Globalstar and Apple, but I don’t think it would stop Amazon’s seemingly endless space ambition to dominate global commercial space.”

Michael Piccolo, a senior analyst from Wedbush Securities, said that given Apple currently holds about 85% of Globalstar’s existing satellite capacity, any transaction would require reaching important agreements on infrastructure sharing. Piccolo said this could lead to “an unusual dynamic cooperation relationship between two direct competitors.”

All of the above analysts said that for Apple’s fundamentals and outlook, it may mean that the cooperation relationship between the iPhone brand owner and the e-commerce and cloud computing giant Amazon will be further strengthened.

There has long been a cooperative relationship between Apple and Amazon. The two have worked together to sell Apple devices directly on Amazon’s website without any third-party involvement. Apple is also a long-term important customer of Amazon Web Services (AWS), using this cloud service platform to support many of its own service systems, such as iCloud, Siri, Apple Maps, and more.

“I don’t think Amazon will completely push Apple out, causing Apple to abandon this partnership,” analyst Ostian said. “I think it’s more likely that they will keep Globalstar continuing to operate as an independent operating entity long-term, while keeping Apple as an important shareholder and major customer.”