Beyond Launch: Rocket Lab's Push for Semiconductor Dominance

Rocket Lab USA, Inc. RKLB, a prominent forerunner in launch services and space systems, is stepping up its presence in semiconductor manufacturing to meet rising demand for advanced, space-grade semiconductor technologies. The semiconductor industry has been growing rapidly as satellites, defense programs and commercial applications increasingly rely on secure and high-performance components.

In particular, RKLB specializes in high-efficiency, radiation-hardened, space-grade compound semiconductors used in solar cells and electro-optical sensors for critical missions. Its technologies have already supported landmark projects such as NASA’s Artemis lunar program and the James Webb Space Telescope, placing Rocket Lab in a strong position as demand increases.

In December 2024, Rocket Lab secured a $23.9 million award from the U.S. Department of Commerce under the CHIPS and Science Act to expand its semiconductor manufacturing capacity at its Albuquerque, NM facility. Through these investments, the company plans to double production from 20,000 wafers to nearly 35,000 wafers per month and supply U.S. spacecraft manufacturers with domestically produced semiconductors.

No doubt this expansion, once fully realized, should play a critical role in strengthening Rocket Lab’s position in the expanding semiconductor market, backed by increasing utilization of semiconductors in space and defense capabilities.

Other Stocks Advancing Semiconductor Capabilities

Like Rocket Lab, other aerospace and defense stocks like Northrop Grumman Corporation NOC and L3Harris Technologies LHX are also making progress in semiconductor technologies.

Over the decades, Northrop’s microelectronics technologies, made from semiconductors, have played a critical role in national security by supplying trusted microchips to defense programs and military systems. Its Advanced Technology Lab in Linthicum Heights, MD, operates a semiconductor foundry and testing center that produces custom radiation-hardened chips for the Department of Defense and other government clients.

On the other hand, L3Harris’ microelectronic components play a crucial role in the success of missions across multiple domains. Impressively, LHX’s microelectronics go beyond traditional circuit cards or electronic components to create a customized solution for each customer, so that they meet the specific needs of any mission.

RKLB’s Price Performance, Valuation and Estimates

Shares of RKLB have gained 702% in the past year compared with the industry’s 39.3% growth.

The company shares are trading at a premium, with its forward 12-month Price/Sales being 30.20X compared with its industry’s average of 10.28X.

The Zacks Consensus Estimate for RKLB’s near-term earnings has improved over the past 60 days.

RKLB stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research