The suspected Chinese spy balloon is the space industry’s Sputnik moment

Now that the US military has shot down a Suspected spy balloon from ChinaThere will be debates about the balloon’s meaning, its capabilities, and why it was there in the first place.

Although former CIA director Michael Hayden said on Friday that its threat to the well-being of Americans was significant swellOthers described the incident as a wake-up call. Trump’s former national security adviser H.R. McMaster hopes this will “Sputnik moment’, in a return to the US space race with the Soviet Union. Indeed, the Wall Street Journal warned, “balloon gapwith China.

The balloon was flying at about 60,000 feet and may have been gathering intelligence. He. She Fly high military sitesand the Pentagon He said It was an observation balloon, which the Chinese Ministry of Foreign Affairs denied, say “It is a civilian balloon used for research, mainly for meteorological purposes.” The balloon wreckage is now being recovered and examined to learn more about the Chinese technology.

With the rhetoric about the threat from China reaching a degree of hyperbole, one thing is clear: Space is the place — for military contractors and private capital, that is. When I asked military industry experts and investors in recent months what general trends to watch in the coming year, many emphasized that space-related technologies, as well as satellites and drones, are a booming industry. Although each of these technologies do different things and operate at different heights, they are arenas for intense US competition with China — and technologies where artificial intelligence and autonomy will be tested.

Former President Donald Trump fired Space ForceBut this new space race is not limited to governments. Private investors vie to pick pet startups, as former US national security leaders join advisory boards to offer strategic insights into the geopolitical landscape.

more than $45.7 billion in private capital Investment in the space industry took place in 2021. Last year was slower ($21.9 billion), but that may be a result of 2021 being very fiery. Despite recent tech layoffs, companies with cutting-edge software and hardware are attracting Big investments.

And now balloons will enter the conversation.

A bloated commercial space industry

It turns out that balloons are already part of that US arsenal, with the Pentagon spending $3.8 billion over the past two years on them, according to Politico. As industry expert George Howell to publish On LinkedIn, “High Altitude balloons are a very smart thing to invest in, they’re cheap, easy to transport, can be sent out into the field in large numbers and are uncapped,” which means that although they may carry cameras or radar, in certain situations balloons can deploy a weapon.

Military contractor and balloon maker Aerostar made it more blunt in A video She posted on social media this week: “Even the sky’s the limit!”

Balloons are ancient technology, vulnerable to high winds, but their weaknesses also translate into advantages, because they fly low enough to avoid detection, says George Nakouzi, chief engineer at Rand Corporation. He expects “some focus on anti-balloon technology,” including “balloon killers.”

Kevin Liu Huang, entrepreneur who writes Marawan defense newsletter about trends in military technology investments and start-ups, he is not interested in the balloon gap per se, but sees the episode as a symbol of competition between the United States and China for satellites and drones. “It’s all a very thriving kind of geopolitical competition,” he told me. “It’s also a very thriving industry and market.”

These trends are now likely to be capitalized on by private US technology companies, military contractors and researchers studying the space race who are often underwritten by the industry itself. “Beijing is rapidly expanding both the government and commercial space sectors,” Carrie Bingen of the Center for Strategic and International Studies said recently. Congressional hearing. “We must take urgent and targeted steps to preserve our space advantage.” Last year, Rep. Mike Gallagher, a rising figure in Republican national security, argued that the Pentagon should be bought. commercial satellite technologieswhich he said is moving faster than aggressive government procurement efforts.

One indication of how hot satellite and aerospace startups are is that they have become a revolving home for retired military and intelligence officials. Satellite imagery provider Planet is one of the big investments of former Google CEO Eric Schmidt. There is, too HawkEye 360whose satellite constellation uses radio frequencies to assist Military and intelligence agents Trace the events below, which many past American policymakers have journeyed through, and Maxar Technologiesa satellite company known for its high-resolution images of the Earth.

The effects of the balloon accident on the space and satellite industry won’t be felt immediately, but a sense of what might happen was palpable at last week’s event — before the balloon news broke — in midtown Manhattan hosted by Silicon Valley Bank. Member of the project group America’s Frontier Fund He spoke on a panel discussion and offered rare candor about the benefits of investing in advanced technologies to counter China. “If the situation happens between China and Taiwan, some of our investments could be as high as 10 times as much as overnight,” representative for America’s Frontier Fund He said in the event.

The fund is backed by Schmidt and tech magnate Peter Thiel, and in its marketing it compares its cutting-edge investments with urgency Space race between the United States and the Soviet Union. McMaster, for his part, is serving in the box board of directors and as a board member of Shield Capital, another military-focused investment group whose portfolio includes satellite companies, such as Hawkeye, as well as drone producers.

“Remember 1957 with the Soviet satellite,” McMaster said He said. “Maybe this is a wake-up call, hey, we need to compete more effectively against the CCP, the CCP, and its actions against us.”

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