Two prototype low-Earth orbit satellites made by Hon Hai Precision Industry Co., better known as Foxconn, took off aboard a SpaceX rocket from Vandenberg Space Force Base in southern California on Saturday.

The launch of the LEO satellites marks a key moment for the Taiwanese electronics manufacturer as it diversifies into new sectors, a shift that is taking greater urgency as some of its established businesses such as smartphones and laptops struggle. Foxconn is aiming to demonstrate that it has satellite technology to tap growing demand for communications from space.

While Elon Musk’s Space Exploration Technologies Corp. has made and launched more than 5,000 LEO satellites for its Starlink constellation, Foxconn is betting it will be able to make satellites primarily for corporate and government clients.

The satellites, co-developed with Taiwan’s National Central University, are the size of a backpack, weigh about 9 kilograms (20 pounds) each and carry cameras, communication devices and other equipment. They are designed to orbit Earth every 96 minutes at an altitude of 520 kilometers (323 miles).

New Growth

Since taking over from founder Terry Gou in 2019, Foxconn Chairman Young Liu has looked for ways to diversify — focusing on electric vehicles, digital health and robotics, as well as technologies for artificial intelligence, semiconductors and communications satellites.

“I needed to find some something so that the company is able to grow for the next 10, 15 years,” Liu said in an interview with Bloomberg Businessweek.

Revenue at Foxconn, the world’s third-largest private employer after Walmart Inc. and Amazon.com Inc., is expected to drop about 6% this year to NT$6.2 trillion ($192 billion), according to estimates compiled by Bloomberg News.

Order Book

While Apple Inc. needs millions of iPhones a quarter and frequently updates models, customers can go a long time between orders for LEO satellites, so the businesses is much less predictable, said Tim Farrar, president of Telecom, Media and Finance Associates Inc., a consulting firm in Menlo Park, California. Foxconn makes about two out of every three iPhones in the world.

For an outsourcing manufacturers like Foxconn, “unless you can find another one that comes along at the right moment, your life can be very difficult,” he said.

Government orders could provide Foxconn with some security as it builds out its satellite business, according to Farrar.

“Foxconn is thinking, if the Taiwanese government gives us a baseline of orders every year, that will be OK,” he said.

Taiwan is working on a plan to launch its first LEO communication satellite, part of a strategy to develop space-based alternatives to the undersea cables that provide most of the island’s internet connections.

Read More: Foxconn Makes Your iPhone. Now It’s Aiming to Make Electric Cars

Another line of support will be Foxconn’s electric-vehicle business, since they require real-time communication technology, said Jason Wang, a Foxconn analyst with MasterLink Securities Corp. in Taipei.

“You need to have a solution in place for your car to use,” Wang said. “If they want to export this business, they at least need to have an infrastructure in place to demo the technology in Taiwan.”

The company’s background in electronics and know-how gained from making smartphones, games consoles and other devices should help with that.

“Taiwan is very good at making all different kinds of commercial products in electronics,” said Shiang-yu Wang, a research fellow at the Academia Sinica’s Institute of Astronomy & Astrophysics in Taipei. “These companies can easily switch” to space.

— With assistance from Debby Wu and Reed Stevenson