Sphere's Expected Supply Volume Reaches Approximately 1.54 Trillion Won
Core Products Unaffected by US Tariffs
KOSDAQ-listed company Sphere surged on news that it has signed a 10-year long-term supply contract with SpaceX, the American private space launch company led by Elon Musk. According to the securities industry, Sphere is expected to attract even more attention, as the products it supplies are not affected by tariffs.
According to the Financial Supervisory Service's electronic disclosure system on August 4, Sphere signed a contract with SpaceX to supply special alloys such as nickel and superalloys for 10 years, until December 31, 2035. After the contract expires, it can be extended for up to three more years at the request of SpaceX.
The estimated contract value, calculated based on demand forecasts, is approximately 1.544 trillion won over 10 years. Of this, 77.2 billion won worth of supply is already confirmed for delivery from January to December next year. This amount is equivalent to a 2,969% increase compared to Sphere's sales of 2.6 billion won last year.
Sphere is a global vendor of special alloy materials used in key rocket launch vehicle components for SpaceX. Since Sphere merged with its largest shareholder, Sphere Korea, in March, the cumulative value of supply contracts has exceeded 43.1 billion won.
After this news broke, Sphere's stock price hit its upper limit on August 1. The fact that Sphere, which had previously referred to its contract counterpart only as a global aerospace company, has now directly named SpaceX was also interpreted as a positive signal.
According to Meritz Securities' analysis, SpaceX and Sphere are expected to build a long-term cooperative relationship. SpaceX has pursued a supply chain management (SCM) model to achieve maximum efficiency with minimal personnel in raw material procurement. The SCM model pursued by SpaceX can be exemplified by its long-term contract structures with Boeing and Thyssenkrupp Aerospace (TMX).
TMX, as a global control tower, has managed Boeing's entire supply chain, including demand forecasting, inventory optimization, parts receipt, technical inspection, assembly, and delivery. TMX signed a 10-year, $300 million long-term supply contract with Boeing in 1998, which was extended for another 10 years in 2008. In October 2023, TMX and Boeing signed another long-term extension contract to mark the 25th anniversary of their partnership.
Additionally, Sphere is drawing more attention as it has avoided the impact of increased US tariffs. On June 3, the United States signed an executive order raising tariffs on foreign steel and aluminum, including those from Korea, from the previous 25% to 50%. This executive order covers a variety of products, including steel pipes, steel wires, and steel structures.
However, nickel alloy products with a nickel content of 50% or higher were excluded from the tariff increase. Jeong Jisoo, a researcher at Meritz Securities, explained, "The main products supplied to SpaceX by domestic companies are special alloys with a nickel content of 50% or more, so they are not affected by the US tariffs."
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