Iridium shields supply chain as higher tariffs loom

TAMPA, Fla. — Iridium is ramping up tariff countermeasures to shield the U.S.-based satellite operator from import tax hikes as global trade tensions escalate.

The operator has historically imported satellite communications equipment primarily from Thailand to a distribution center in Arizona, where products are packaged with other components before being shipped to customers inside and outside the U.S.

However, CEO Matt Desch said April 22 that Iridium is expanding a European third-party logistics partnership established last year to divert nearly all non-U.S. shipments from Thailand away from exposure to the latest round of U.S. tariffs.

Only a quarter of Iridium’s annual equipment is shipped to U.S.-based customers, Desch said during the company’s first-quarter earnings call, adding that the company sources very little from China, which is subject to the steepest tariffs announced earlier this month by U.S. President Donald Trump.

“We estimate that the current U.S. trade policies, based upon a minimum tariff of 10% for Thailand, would result in approximately $3 million of incremental cost to Iridium this year,” he said — a cost the company intends to absorb without raising prices.

However, he warned Iridium could face up to $7 million in additional costs if Trump reinstates a previously proposed 36% tariff on Thailand, which was suspended shortly after being announced April 2 while trade talks continue.

“While we could choose to mitigate some of the remaining import costs through equipment surcharges to our customers, at this time, we prefer not to undermine our strong market position and business momentum,” Desch said.

Broader tariff impact

While Iridium appears relatively well-positioned to weather near-term tariff impacts, analysts warn that the broader satellite industry could face more significant disruptions.

“The satellite industry sources equipment through a wide global network, so no one will emerge unscathed,” said Armand Musey, a satellite industry analyst and founder of advisory firm Summit Ridge Group.

“The largest issue is likely to be user equipment manufactured abroad or with large amounts of foreign components. In general, companies with the fastest-growing customer bases, such as direct-to-device (D2D), are likely to hit the hardest. However, some devices, like iPhones, appear to be exempt from the new tariffs at least for now.”

Foreign component manufacturers supplying U.S. satellite makers are significantly exposed — particularly those based in countries facing the highest tariffs, which also include Vietnam, where rates could reach 46%.

“Their customers will likely seek alternative sources wherever possible,” Musey told SpaceNews via email.

He said it remains unclear whether satellites manufactured abroad for U.S. customers would ultimately be subject to higher tariffs. If they are, U.S. buyers of satellites from Canada-based MDA could face tariffs of up to 25%, depending on component sourcing.

Given the satellite industry’s global nature, Musey noted that foreign customers of U.S. companies could also be affected by retaliatory tariffs their governments may impose in response to U.S. trade measures.

Confident outlook

Iridium reported a 5% year-over-year increase in total revenue to $215 million for the three months ending March 31, driven by growth in service revenue, particularly from connecting Internet of Things (IoT) devices. Net income jumped 53% to $30 million. 

While commercial broadband sales fell 6% amid competition from Starlink, Desch said Iridium’s weather-resistant L-band spectrum continues to differentiate its services from SpaceX’s sprawling satellite network. 

The decline was partly due to some customers downgrading Iridium to a companion connection, but Desch emphasized the company’s unique role in safety-critical maritime and aviation services, where Starlink does not have regulatory approval.

Desch also played down the competitive risk from emerging D2D startups such as AST SpaceMobile that rely on partnerships with terrestrial cellular providers, saying this nascent market is “not a zero-sum game.” 

Most D2D efforts relying on spectrum from cellular partners face regulatory and interference issues, according to Desch, unlike Iridium’s space-approved L-band services.

He said Iridium plans to begin testing its own D2D service this summer in partnership with Norwegian chipmaker Nordic Semiconductor. 

The service would use forthcoming chipset standards, enabling compatible cellular devices to roam onto Iridium’s global network, with initial revenues slated to begin next year from IoT devices. 

Desch also said Iridium is seeing strong early traction for its STL (Satellite Time and Location) service, set to be a “major driver of revenue growth in both civil and commercial applications to 2030 and beyond,” amid growing concerns about GPS jamming and spoofing.

Budget cuts and geopolitical headwinds

Recent United States Agency for International Development (USAID) funding cuts have led to a small number of subscriber deactivations, although Desch said broader U.S. government budget tightening has not materially impacted Iridium’s business.

The U.S. government accounts for about 20% of Iridium’s business, he said, which remains dominated by commercial IoT and safety-critical applications.

And despite growing protectionism and efforts in Europe to reduce reliance on U.S. suppliers, he said Iridium continues to be seen as a neutral and trusted global partner.

“We believe Iridium is fairly insulated from the recent protectionism and nationalistic rhetoric,” he added, “but like every company, we may face issues on the margin as we move through the year.”