Hello everybody in the room and online. Apologies to those online and to those in the room for getting started a few minutes late here. We had so me technical difficulties getting the audio here connected to the webcast, but I think we're up and running and are live now. My name is Jason Gursky, the Aerospace and Defense Analyst here at Citi. I have the great pleasure of welcoming, and I think genuinely probably the only time I'm going to say this on the stage this week, I'm welcoming a friend to the table.
There you go.
To the stage here. Mike and I have some shared life experiences. We're both alumni of Maxar Technologies. I'll hand it over to Mike to give a little bit more background on the company for those that may not be as familiar with MDA, but it is, for lack of a better word or phrase, I guess I should say, Canada's space company and was a part of Maxar until 2020.
Yep, 2020.
That's when the spin, I think, was consummated. And so Mike and I had the pleasure of overlapping for a couple of years while we were both at Maxar. Mike, maybe we'll just open it up with a really big picture question, and maybe have you describe kind of the problems that MDA is trying to solve for its customers from a technology perspective, how you all kind of go about that, and what differentiates MDA in the market. And maybe just start with a little bit of history lesson for those that may not be as familiar with the company and the rich heritage that the company has.
Sure. So MDA is a pure-play space company. It's been around for 55 years this year, which is kind of neat. Our sort of areas of business that we've gotten into over the years and have been in a fortunate position to become legitimate kind of world leaders in each of the three areas we do business. So if you look at why people launch into space, typically it's for one of three reasons: to do Earth observation, to do space-based communications, or to do space exploration and infrastructure. And we have legit world-leading positions in each of those three things. So we've got a business in geo-intelligence, Earth and space observation, where we own and operate a radar-based satellite to deliver radar imagery to largely defense and intelligence customers around the world.
We've got our own good little niche there where we've got broad-area surveillance, fully taskable radar satellites that largely defense and intelligence customers ask us for data on a daily basis, and that continues to go very well. It's our largest area of investment in the business to replace that satellite. So we have a unique position where we're technically differentiated in our radar satellite, and then we're making the investments necessary to stay ahead in that area for the next decades. In robotics and space operations, our second business area, we're in the space infrastructure business. And so we built the robotic systems for Space Shuttle and flew 100 missions, and then the robotics for the International Space Station, which we've done for 25 years. And now we're building the robotics for Gateway, the new space station for the Moon.
We're differentiating ourselves even further now by creating commercial derivatives. We've got a commercial product line of robotics for the gro wing commercial market for commercial space stations and the like. In the third area, space communications, we've worked in space communications for older than the company, actually, because of acquisitions, but over 60 years, delivering communication technology to satellite manufacturers in a merchant-supplier model, which is still a strong foundation of that business.
But now we've transitioned into a full satellite prime role to deliver satellites as the prime contractor for low Earth orbit or LEO constellations. We've launched a new digital satellite product. Very differentiated there in terms of leading the market with a fully digital, dynamically reconfigurable satellite for space-based communications. In each area, we've got decades of heritage in Earth observation and space infrastructure and in space communications. But then we're making the necessary investments in the last few years to be able to stay at the leading edge of each of those three areas as we move forward.
Great. You mentioned maybe we'll go through all three of those areas.
Sure.
Yeah, it's a great way to do this, I think. It lines well with the set of questions that we've prepared for this. So let's start out on communications.
Okay.
We've had some nice wins here over the last several years, right? Both analog, I think, as well as on the digital side. So maybe we'll start with the simpler stuff, the analog stuff, which I think you guys have quite a bit of experience designing payloads for in the past and antennas, et cetera.
Yep.
Now you're moving up into that prime position on that Globalstar.
The Globalstar deal.
Yeah, program.
Yeah.
So maybe talk a little bit about how that program is progressing. What are the key milestones ahead of us? Just kind of any flavor of maybe talk about the size and scope of the program to give listeners a sense of that as well. But just kind of give us an update on that program, how it's progressing, and kind of what's next for Globalstar and how you might participate in that too.
Yeah. So two years ago, we picked up the Globalstar contract. Globalstar operates space-based networks for a living. It's generally known in the market that Apple is their primary customer that takes at least 85% of their capacity these days for direct-to-device communications for services to iPhones and the family of digital products there for Apple. Yeah, so we were in a competition. We were asked to join a competition to provide the satellites for Globalstar three years ago, and we won that. And it's been great. It's been a great relationship. The program has stayed completely on track through the first two years. And so we went through PDR, right on track, through critical design review, CDR, right on track. Now we're in production. And so we'll be doing sort of March to March.
Coming up here is our third and final year of that program, and we'll be delivering all of the 17 satellites we were ordered. There's an option in that contract for nine more. That hasn't been activated yet. We're just working on the first 17 right now. But yeah, that's going extremely well. And so Globalstar seems to be a happy customer. It's good.
Yeah, great. So those additional options, those all would flow to you by design.
We have options. We have that in our contract, the options there. And then with any communication constellation customer, you're always watching for two things as well. You're looking for the opportunity for expansion. Are they going to expand their constellation?
Yeah.
In addition to, over time, replacement satellites. So it's always important to look at how many satellite slots people have filed for with the ITU through different countries. So Globalstar, they've filed for 3,000 slots over time. They have lots of room to do expansion of networks in space based on whatever ambitions they pick up over time. They're a great customer because they can really do solid expansion in the future. You'd also look for the opportunity for replacement satellites over time as well.
Yeah. I guess two questions on the Globalstar constellation is kind of double-clicking a bit on it. So the phone-to-satellite communication, the ones that you're designing now, are those meant for largely data and kind of SOS kind of messaging, or are we going to start doing voice over those things?
Yeah. So I think that the different customers will move in different spaces, different speeds. Globalstar, Apple, is one customer base. We talk to other opportunities in the world for direct-to-device communications, and different people are looking at different levels of intensity. Certainly right now, the current satellites that Globalstar is operating and Apple's service is an SOS service. You put up more satellites with more capacity, you could move into more texting and more data. There are some in the market for sure that are looking at much more powerful satellites that would be able to do more sort of higher volume texting, email, voice even someday applications. So people are looking at all those different levels in the market right now.
What unlocks that market? Is it the device here on the ground, or is it the satellite technology?
Well, both have to work together for sure. So you need the technology in both. And I think the full technology base to be able to do that is available. We get involved in studies and design work across that full spectrum of capability for direct-to-device. So it's going to be there. I think then there's going to also just be the whole market pickup, right? Where do satellites fit in with mobile operators? How does that all work together in the marketplace? That just needs time to just gradually emerge as people get used to it. Just like has always happened in communications. When we first started with the internet, right, there was slow basic capability, and we went from 256 to 512 to a megabit. So just kind of build your way up.
All that same stuff's going to happen gradually, maybe not so gradually, on the satellite side.
Yeah. Yeah. Maybe this question will serve as the transition into the digital payload and the Telesat program. But why did Globalstar decide to do analog versus a digital?
They had an existing fleet, well, I don't know exactly, but I do know that they have 24 satellites up today, and they were able to turn those on and start some service. Then our additional 17 were made to be compatible with those existing 24 so they could have just a bigger network of the same technology base. So that's what that was designed for. Other folks, like our Telesat win, they're building a new broadband capability, and they just wanted or saw the benefits of moving to digital straight away because that was a brand new constellation.
Right. Right. So I think, transitioning maybe for a minute to Telesat and the high-speed constellation, one of the most frequently asked questions that I get from investors on that program is you had Thales that was there getting ready to build that for a certain price point, and you all were able to come in with some differentiated technology and lower the price point on it. So maybe you can walk us through how you were able to do that. And yeah, maybe start there. Just to.
No, that's cool. So with digital satellites, you end up with a software-defined satellite. You end up with a dynamically reconfigurable satellite, and you're doing digital beamforming of your communication beams from the satellite. You're configuring and steering and adjusting those digitally in real time as you operate your satellite. As a result of that, you can have more communication beams on the satellite in addition to making sure that they're dynamically reconfigurable in real time. The digital technology enables you to be able to sort of do more with less. So you end up with you can deliver a similar capability with less power demands. And so you've got less power, less mass on your satellite. Your satellite can be smaller. You have less heat management, so it can be cheaper. So you can end up with a more efficient design that way.
In the operation of the satellite, it's more efficient. So if you've got an analog system, your beams are pointing where they're pointing. And as the satellite flies, that's where they're pointing. If you're flying over an ocean, you're just pointing off into the ocean and not having a lot of customers being served, right?
Whereas with a digital beamforming satellite, you can be aiming all your beams over towards the land, and you can be condensing those beams over New York City or Miami here, where we are right now, and delivering very powerful service at the right times of day where you've got the most customers. And so you can optimize your service and be making the most money-making opportunity possible out of your satellite. So it can be cheaper to build and then a lower cost per bit to operate. It's a solid economic advantage to switch to a digital satellite.
The biggest question, why didn't they go that direction to begin with?
It was technology maturity. So Telesat was a journey. They were in the market for several years. You'll notice that OneSat, when they went out into the market, that's all analog technology. They were out a few years earlier. Telesat was talking in the market. They had looked at digital for sure. Telesat's a very well-informed engineering team, very experienced satellite communications company. So they had looked at digital technologies and felt that it wasn't quite there yet when they had, two years earlier or three years earlier, kind of instantiated that Thales-led deal, which we were a part of. It was good work for us. And then over time, as that continued to not turn into a final deal, we had been doing research and development and investment in a digital satellite solution. And we felt we were there.
Telesat asked us questions about it, and they felt we were there, and so they switched over.
So talk a little bit about the technology maturation of it, what got them comfortable. I know that you all have gone out subsequent to the announcement of winning that business and made an acquisition to bring in some of that technology so that you kind of control it. So maybe talk to us a little bit about 5-8 years ago, where the digital technology was, where it is today, what got them comfortable, and kind of where you are in your development process.
Yeah. So for us, technology, in quotes or whatever, is at multiple levels. So core technology in digital satellites, you get into the chips themselves. You should have went space-grade ASICs to be able to have in a design. They continued to mature in the market. There are a few providers around the world that are working on those. SatixFy, which is the acquisition that you mentioned, we acquired their digital payload team. Their company was split into two divisions. One that was designing and building chips. The other that was using those chips to design digital payloads. We design and build digital payloads. So sorry. We picked up their digital payload division, which gave us more capacity and allowed their remaining company to just focus on the chips and finish the completion of the latest generation of technology and then work on their roadmaps for the future.
That worked out really well for us. They're in a place where they have proven chips. They have space-proven space-grade chips that we've seen, and they've got a roadmap that we were aligned with in terms of feeling comfortable working with that. By picking up their digital payload team, it gave us even more confidence from a risk reduction perspective that we had the most knowledgeable people to use those chips to complete them in our satellite design. That's working out well. We've seen their chips. We have our hands on them. We've tested them. We understand them. You get confidence that you're at a ready-to-go state.
Then the systems design side, where you're doing all of your systems design for your digital antennas, your onboard processors on the satellite, that they had just matured to a level whereby we had proven, tested designs that we could take to the street or take to the orbit. And so both the core technology and the systems designs had all reached a level of maturity where it's very clear in the conversations around the world that we're coming to market with this new digital satellite product. And then we mentioned it to Telesat that they could see us coming to market with this digital satellite product and said, "Hey, what's that going to look like? Let us learn more about that." And that's what caused the deal to switch over to us.
OK, great.
Which then, by the way, really helped in the pipeline, right? So it's a great thing to have a digital satellite product. It's an even better thing to have an anchor customer buying 200 of them to then give other customers confidence that, "OK, I want to talk to these guys too." So the phone did start ringing a bit after that because people need to check that out now in the market, right? So it's been good for the pipeline.
Yeah. So this is a good segue. You mentioned pipeline. I was just going to go there. So talk a little bit about the pipeline because I know you are fairly constructive on the outlook for that part of your business. You've got a satellite facility that you've talked about having throughput of maybe as many as 400 satellites a year. And I want to get to that in a minute. But let's talk about the pipeline first and then phone ringing off the hook. Were those for people that have analog constellations now that want to figure out whether they need to be converting over, or were these people that have got about ready to issue an RFP for something?
I think both. Yeah, definitely both. For folks, Telesat was pretty vocal that they were making a switch, and it had economic value to them. The CEO of Telesat was pretty vocal about that. So people hear that and say, "Well, we should check that out too," right? So people call and want to talk about that in addition to folks that were already in the market looking for digital solutions right from the get-go. So both of those are there. We talk as a business right now. When we look at our company, in all three of these business areas we've been discussing for the next five years, we're tracking about a $17 billion pipeline. We're public about that. And about $10 billion of that would be in low Earth orbit or non-geosynchronous orbit satellite solutions, NGSO satellite solutions, most of which are digital.
And so that's a really active part of the business. In the current wave of growth in the space market, that non-geostationary orbit satellite business is the highest growing area of the space market right now for us. And so that's pretty active. So for us to be tracking sort of $10 billion of opportunity over the next five years, it's a nice busy spot to be in. And you're able to really focus on customers that have the financial capability to do their projects. And there are definitely a number of folks that have the financial capability to do their projects. So you talk to a market that has broadband services, people that operate space-based networks for a business and want to deliver broadband. You talk to corporations largely that want to talk about Internet of Things.
So they want to put up networks to track their things around the world, whether it could be vehicles or other technology items. And then you've got this direct-to-device communications market we were talking about where folks want to build networks for that. And then the military market for communications, which is moving more into low Earth orbit constellations, which is currently mainly analog, would have a strong potential to go digital as well. So there's a good demand load here on the pipeline.
Right. Maybe this would be a quick one on the military side of things. Where can you play? Which markets? Can you be down here in the United States doing SDA work?
We work on SDA for sure. All of the primes on SDA pick up antennas from us. So we're supplying all the primes. So we've been in a fortunate position, as you mentioned earlier, in our merchant supplier business. We've always been a leader in antennas. This journey into low Earth orbit constellations for us is not a new thing. And I was doing an interview the other day, and someone said, "You guys are like an overnight success." And I said, "No, we're like an overnight success in Nashville, where you've been singing in the bars for 10 years, and then you finally had a hit song," right? And so we've been doing this for quite a while. So in the low Earth orbit constellation market, we worked on O3b and Iridium NEXT. And then OneWeb was great for us because that was a 600-satellite constellation.
We did all the antennas. So 2,500 antennas we had to deliver for that, which switched us to additive manufacturing, much more 3D printing, far fewer parts, advanced manufacturing, robotic assembly, and test. And so that really got us into a good groove. So we got really efficient, tight products that we could produce quickly, high volume, low quality, good price. So when SDA came along, everyone needed antennas for all these low Earth orbit constellations. Our merchant supplier business just connected with all those folks, and we're able to supply to all of them, which is great. I think that role, where you're a technology provider into a U.S. prime for U.S. DoD work as a Canadian-based company, that works for us.
I think if we ever needed to shift and become more of a satellite prime in the defense market, then we do have that capability in North America. The Defense Production Act for North America would allow that activity. But you get into probably some Congress people would disagree, right? And so you might want to become a little bit more present stateside if you wanted to get in that game a bit more. But we're very happy where we are right now. We have large volumes, large growth. I think we just signed our 10th and 11th repeat order for technologies on SDA constellation work. So it's a great repeat business model right now as that constellation in the different tranches continues to expand.
Yeah. It seems like that business hit at a really good time because your work on OneWeb was probably starting a lot earlier.
Yeah, like I say, there was a great evolution for us. Yeah. Well, OneWeb, the next thing that will happen on OneWeb is it'll get into replacement satellites pretty soon, right? Because it's getting near that first five years. And so their design life for those satellites, they'll need to do some refresh. So it could be that's one of the greatest things about the transition in the space business the last few years. With low Earth orbit constellations, you get very large numbers of satellites, some slightly lower design lives. So you get into recurring or replacement, however you want to call it, revenue. And so we're pretty close to the time when OneWeb should come back around and want to be doing some replacement work on those first 600.
Yeah. So last question on the space hardware business. Just talk a little bit about the competitive environment. So you had SDA starting to roll out some buys and the primes ran to you guys to get antennas. Who do you compete against in the antenna business?
Yeah. I don't even know. I'm just kidding. Typically, we compete. Honest to God, our biggest competitors is often internal departments. So inside an Airbus or a Thales or a Lockheed or a Northrop or an L3Harris, they've got antenna groups inside their companies. And so it's a make-buy decision for these folks, which is, is it better? And so what we've found historically for us is that on things like SDA, where we've got a really tight product, we can do high volume, good quality, good price, is that you've got an efficient solution for them. And then there'll be a layer where they'll just use their internal departments. And then when it gets really complicated, they'll often come to us again. So when it gets really hard on the antenna side, a lot of those folks will come to us to take that on.
Yeah. OK. And then on the digital payload side, who do you think are going to be the primary competitors there?
Yeah. So different folks different people have digital solutions from geosynchronous orbit, right? Boeing's done digital. Airbus has done digital. Thales could do some digital. So different folks could choose to come forward in the LEO market with digital capability. And people will. Any of those large primes can pick up the chip technology, develop a solution. It takes a couple of years to do that. We're fortunate that we kind of timed it right a little bit in terms of working on our solution at a time where we were able to now introduce that straight into some good constellation opportunities. The more that people switch to digital, the more that obviously the suppliers will switch to digital. And it'll be a little bit more competitive. And then we'll just work hard and stay ahead.
Yeah. Well, it seems like that's a logical place to go. I mean, we certainly saw that in geo, right, where people transitioned away from analog into digital.
For sure.
Yeah. OK, great. Maybe switching gears, let's go to robotics. If for no other reason than I want to talk about the back of the $5 bill, is it still the case that Canadarm is on it?
Canadarm is still the image on the back of the Canadian CAD 5 bill. So it's cool to run a technology company in Canada where your technology is on the currency. We've had our Canadarm on the back of the CAD 5 bill for years. We used to have our radar satellites on the CAD 100 bill. We've got a whole range of postage stamps and everything else. So it's a pretty neat thing in Canada where you've got a global space company but headquartered in Canada. So it is a pretty solid source of national pride. Yeah.
Yeah. I'll never forget the first trip I took into Toronto. I took a cab from the airport over to what's the name of the neighborhood where your office is?
Brampton, I'm sorry.
In Brampton. Yeah. The cab driver drops me off and says, "Oh my god, you work at MDA? That's so cool." I'm like, "How does a cab driver know? Why is he excited about the fact that I work at MDA?" But there you go.
I know. We need to teach all those cab drivers to buy stock.
Right. So in the robotics area, I know you've got and in the space exploration, maybe we'll call it the space exploration business, generally speaking, I know that you guys are involved in a project that might have some exciting news as early as tomorrow. Maybe you can talk a little bit the lunar landing that's coming up, right? You have some sensors on that.
Oh, for sure. We do. Yeah. Intuitive Machines is sending potentially North America's first spacecraft to the Moon since the Apollo days. It's supposed to land. Intuitive Machines should land on Thursday at 5:00.
That's tomorrow.
That is tomorrow. I'm just going through the data in my head for press releases. At 5:00 P.M., I think, is when that's supposed to happen. And yeah, so that's pretty cool. So our lunar landing sensors are on that. So the first thing tomorrow afternoon, hopefully, that'll be pinging down to the lunar surface would be MDA lunar landing sensors pinging the ground. So that's kind of a neat, exciting moment for people. MDA had technology on the Apollo spacecraft that landed on the moon back in the 1960s, 1970s. And so this is like our second time in the moon with a big 50-year gap in between. But yeah, pretty cool for our people and a lot of excitement. Those particular sensors come out of MDA in the U.K., our team there. And so I'll actually be in the U.K. the rest of the week.
So my phone's lighting up a little bit with media in the UK right now. So there's a lot of excitement over there to have these products going up to the moon tomorrow afternoon. Pretty fun on that side of the space exploration business.
Yeah. Look, I think it's worth highlighting as well for investors that this U.K. business that you're talking about, those sensors came from an acquisition because you are making some acquisitions. I think it's a good idea to highlight.
Little ones over time. Yeah. So we bought a company in 2018. It was called Neptec at the time. It had a Canadian group and a U.K. group. Yeah, a lot of our proximity sensors and laser-based sensors are from those businesses. So yeah, we've got some projects like these ones. There's multiple sales. We've had, I think, five orders for lunar landing sensors for upcoming missions to the moon. We've got some other laser-based sensor contracts for a mission that's going to go and land on Phobos, one of the moons of Mars. That's out of Japan. So there could be some neat stories that come out of that in the future. So yeah, it's an interesting aspect of the business. You need the sensor business because of the robotics business.
So whenever you're using your robotics, you're often doing proximity operations between two things that haven't been built to meet each other. And so you've got to do 3D scanning and real-time imagery to be able to dock and berth or get close to something and then use robotics to assess it, repair it, inspect it, move its orbit. So there's a growing market. With more and more satellites going up, the business of doing on-orbit servicing and maintenance of other spacecraft is increasing.
And so our sensors business and our robotics business and our satellite systems business, they're starting to come together more so we can build a satellite or a spacecraft, put sensors on it to come close to something else, put robotics on it to be able to maintain or maneuver. So as the space market expands, new opportunities for new types of spacecraft increase. Because we work on these multiple areas, we're able to have solutions now that combine the different business lines, which is kind of fun to see.
Right. Right. And the most important program in this business, of course, I think, is the Canadarm3.
Canadarm3 for Gateway. So Gateway is a new space station that's going to orbit the moon. So we had the robotics on shuttle, like I said, and there was robotics on the International Space Station. Now it's the robotics for Gateway. Gateway is a new space station that'll orbit the moon. It'll go up in a few years. And then we also pick up operations for the robotics for that from our new mission control centers we're going to build in Toronto. And so that's an expansion of our recurring revenue that we can have from these space infrastructure solutions that we're delivering, which is pretty exciting. And it's a big new challenge. The current space station orbits the Earth about 400 km up. And Gateway is 400,000 km up. So different communications, more artificial intelligence so we can operate more autonomously out there by the moon.
Then with further habitation of the moon, we're on teams with Lockheed Martin and General Motors here in the United States to bid to NASA rovers for the moon, for example. We've had technology on rovers on Mars the last 15 years. Now we get the chance to look at rover fleets for the moon and being able to work with both U.S. and Canadian customers on that, which will also involve robotics applications. Certainly increasing opportunities. The more that we build commercial space stations in low Earth orbit, Gateway out at the moon, and then robotics and infrastructure on the moon, a number of new commercial opportunities for robotic systems.
Okay, great. I do remember at one point there was some tech transfer that was going on into the medical devices industry. Has there been any further traction?
Yeah, that still continues. Yeah. Yeah. We've had the adoption of our space robotics technology for brain surgery devices that are still in the market. There's one right now. We're a minority owner of sort of a spin-out of MDA technology that's focused on cancer diagnostics. So the first robotic system has been for breast cancer diagnostics to be able to do the whole biopsy and then eventually treatment. That's just received, actually, FDA approval. So its ability to move into the market now is going to be significantly enhanced now that it's got its FDA approvals.
And yeah, so we continue to see those opportunities when they come along. Our robotics are very highly dexterous robotics for space and very, very, very precise control systems. So it doesn't apply to everything. There's often very simple robotics applications that ours are basically too sophisticated for. Things like the brain surgery or the breast cancer diagnostic, those make sense for our level of robotics and control systems. We've seen the odd transfer, like you say, application.
Right.
That's good.
OK, good. Switching gears into the Geointelligence business. Maybe before we get into the SAR satellites and CHORUS, maybe talk a little bit more about the rest of that business, the stuff that's away from the operation of the satellites. And maybe describe a little bit about what you're doing in that business. And just remind me, is this where the surface combatant business starts?
It is. So in the Geointelligence business, it's all about geointelligence. It's all about sensors and sensing, primarily from space or of space. So we build Earth observation satellites and space observation satellites to track all the satellites in orbit. But then that same skill set has been applied to non-space. So we do do work you raised the surface combatant example. So when Canada was producing a new fleet of surface ships for the Navy, we picked up a role as the electronic warfare suite system integrator. And we're building laser and radar-based sensors, which is what we do in space, laser and radar-based sensors. We're doing that for a terrestrial application on ships. And so that's a good program. It's going along. It got slowed down a bit because the Canadian Navy, big naval procurements, they went through a protracted requirements review process and all of that.
But that work continues. So that's interesting. But the main activity is on the space side, for sure, whereby we own and operate radar-based Earth observation satellites. We have delivered a satellite called Sapphire for space observation to the Canadian Department of Defence. And then we have a contract to operate that for them. And it contributes into the North American defense picture of what's going on in space. Both of those worlds have lots of follow-on business, and so lots of follow-on business in radar-based Earth observation satellites and lots of follow-on business in space surveillance satellites.
So, are you guys the ones that found the Russian nuclear technologies?
No, I don't think so. Lots of good media on that the last couple of weeks, so.
Yeah. Yeah, no doubt about it. Okay, so maybe just on the Canadian Surface Combatant because I know that one has gotten some investor attention over time. What's the latest and greatest on ramping into production? You mentioned that it's been a long time.
It's been slow a bit. But yeah, as we come into the 2025, 2026 time frame, they have to start cutting steel on those ships. There's a bigger shipbuilding strategy for the country. And so yeah, those ships really need to be built. So they'll come in to cut in steel, which means that all of the systems that fit into that steel hull have to be completed and ready to go. So as we go through the second half of this year, everything should pick up speed. 2025, 2026, they'll be building ships. Technology has to be delivered as we go through the second half of the 2020s for the first sets of ships. So it'll pick up pace now.
I just want to confirm, because I am not reading the headlines in Canada every day like you are, but from a budget perspective, this one's got a lot of support to get done.
Yeah, it just kind of has to. It's a tricky thing because it's the largest expense in the military in Canada. We don't have a United States-like budget at all, right, for defense. But it is the largest historical military procurement in Canada. But the ships that the Canadian Navy has today, they were built in the 1970s and early 1980s. And they're just worn out. And so this must happen now. The world's not getting any safer. And you need to be able to.
Ice is melting.
Ice is melting. Yeah. From a domestic perspective, you've got oceans on three sides that are emerging now, for sure. And then just being part of the big team, you've got to be in the Middle East more. You've got to be in the South China Sea more. So Canada needs a functioning navy. So it's expensive, but it's absolutely necessary. And so it just needs to get done.
Sounds like a question of time. It sounds like it's a second half of the decade kind of story for you all as a way to frame it. OK, let's spend a few minutes then on Earth observation and the SAR satellites. We're down to a couple of minutes. Great. We got one question. You can go long-winded if you want.
Sure.
Yeah. Time us out here. But talk us a little bit about what you're seeing generally in the SAR market. So you've got RADARSAT-2 today that you own, right? And you're building out one of your own or a couple of your own. I can't remember the number. And then you're procuring some from ICEYE, I think. Is that right?
Yeah. So we own and operate RADARSAT-2 today, which is a single low Earth orbit synthetic aperture radar-based satellite. It's been up for about 15 years now. It's operating well. It's healthy. But it needs to be you have to make sure that you've got continuity. You don't leave anybody hanging. And we want to be able to expand our capability. So we've invested in CHORUS. It's a two satellite constellation to get going with. It includes a large, broad-area surveillance satellite like RADARSAT-2 so that we have all the same imaging modes plus some new ones so that we can keep all those customers with us. And then with a trailing X-band satellite that we're getting from ICEYE. And so if you think of our C-band satellite, it's a large, broad-area surveillance, fully taskable satellite. It can look left and right with big 500 km-wide swaths of the Earth.
And then behind it, like an hour and a half behind or whatever, you've got an X-band satellite, which is doing like 15 km swaths but zoomed in. So you can pick stuff up in a broad-area scan and then zoom in on it with a trailing satellite. That's called tipping and cueing to be able to offer a richer information service to our customers. And so we've announced that we're going to launch that in the fourth quarter of 2025, so a little bit less than two years from now. And we're looking forward to that. It's pretty exciting. And so our business is mainly defense and intelligence-based. If you look at most successful Earth observation companies around the world that are delivering services, most of them have at least some defense and intelligence anchor customers. And then everyone's dabbling in finding ways to connect with commercial customers.
You need that strong defense and intelligence anchor. We have that in multiple countries around the world. Then we also do a range of different commercial dabbling in the market for folks as people learn how to make more out of Earth observation data for their businesses. So yeah, so that's what's going on there. That'll be the next big thing.
So should we think of CHORUS as continuity in helping to sustain the revenue that you have now, or should we view that as a growth driver for the business?
Both. Yep. So for sure, it's continuity. And our customers will roll with us. They're excited about it. But it does offer additional features and capabilities that extend the use cases for synthetic aperture radar. As a result, existing customers are talking about buying more than they historically have. And definitely, new customers are coming to us and saying, hey, this is cool. This is a brand new thing. We put a 15-year design life into it. And so that means it's probably going to last at least 20 years, barring anything accident or something. So that's a great relationship for multiple nations to have with you to be able to get the surveillance that they're looking for.
Yeah. The ICEYE satellite is also designed for 2015?
No, it's for last. It would have to be replaced a few times during that cycle. But it's a much smaller, cheaper object. You can just throw another one up.
Right. Right. OK, I think the clock is going up on us, which means that we're supposed to get off the stage.
OK, whatever you say.
Thank you very much for your time today. It was great.
All right. Thanks a lot.
Yeah. Thank you, everybody.
Thanks.