On the 27th, local time, an engineer at U.S. space startup Varda in El Segundo, Los Angeles (LA), manufactures the ninth capsule to be sent to space. /Courtesy of Kang Da-eun

On the 27th of last month, local time, at 1 p.m., engineers at Varda’s manufacturing facility on El Segundo Island in Los Angeles (LA), California, were inspecting the frame of a spherical space capsule. Once completed, it will measure 90 cm in diameter, 1 m in height, and weigh 150 kg, resembling an ice cream cone. This ninth capsule from the company, scheduled for launch into space this year, will house the world’s smallest ‘bio laboratory.’ It will be equipped with temperature, pressure, and vibration control devices, automated production facilities, and data recording devices, alongside pharmaceuticals. The goal is to conduct drug experiments in the low-gravity environment of space to accelerate new drug development. Wil Bruy, Varda’s CEO, stated, “When analyzing molecular structures of drugs on Earth, gravity often disrupts the structure, making accurate analysis difficult. Experiments in space allow for more precise results.” Varda is the first U.S. company to conduct commercial manufacturing activities in space.

As the shift from government-led ‘Old Space’ to private-sector-driven ‘New Space’ accelerates, the commercialization of space, or the ‘space economy,’ has taken off. In the past, the space industry focused on government-led rocket launches and satellite communication technology. Now, private companies are expanding beyond launch services to R&D and manufacturing in space. Proposals to build data centers in space have also emerged. Just as companies establish headquarters in South Korea and production facilities in Vietnam, space is becoming another production space for manufacturing goods and generating energy. The development of reusable rockets has significantly reduced launch costs, enabling diverse experiments in space.

The U.S. hub driving this commercial space era is the South Bay area of Los Angeles, where SpaceX, a leading U.S. space company, has grown. Once a Cold War-era missile base, the region has transformed into a ‘Space Silicon Valley,’ fostering groundbreaking technologies and attracting investments.

The Dawn of the Commercial Space Era

Around 10 p.m. that day, SpaceX’s building on Rocket Road in South Bay, LA, was brightly lit like daytime. The employee parking lot across the street had over 70 cars on the first floor alone. Within a 2 km radius, there are headquarters of over 10 space startups, including Olly Space, which manufactures small satellite engines, and Astro Lab, which builds lunar exploration vehicles. A 10-minute drive to Aviation Boulevard houses around 20 space startups within two blocks. Many companies here manufacture rocket hardware, hence the area is lined with large windowless warehouse buildings.

On the 27th, local time, around 10 p.m., view of SpaceX office in Hawthorne, Los Angeles, U.S. /Courtesy of Kang Da-eun

Several factors have made this region a key hub for private space industries. Its proximity to Asia and access to the sea made it a center for missile and reconnaissance satellite development since the Cold War. Established aerospace companies like Boeing have also contributed to robust defense and aviation infrastructure. Recent space startups leverage this infrastructure. For example, Relativity Space uses a former Boeing C27 aircraft factory site to build rockets with 3D printers.

The nearby sea facilitates transporting rockets and components to distant launch sites. The region’s proximity to Silicon Valley—just 1–2 hours by plane—is another advantage. It enables active collaboration with AI-driven tech companies and easier access to venture capital.

Local space startups are pursuing diverse ventures. Impulse Space, founded by SpaceX alumnus Tom Mueller, provides orbital transfer services for satellites—acting as a ‘space taxi’ since rockets often fail to place satellites in precise orbits. Slingshot Aerospace developed a ‘space traffic management system’ to prevent satellite collisions with space debris.

The space industry boom has revitalized the local economy. In El Segundo, where Varda is based, over 200 space startups operate. Though the resident population is 17,100, 55,000–75,000 people commute daily. Chris Pimentel, mayor of El Segundo, noted, “The once-declining industrial area is revitalizing, attracting young engineers. Venture investments have surged since 2020, and manufacturing facility vacancy rates are around 2%.” Gina Decker, dean of Long Beach City College’s engineering school, said, “As of last fall semester, mechanical and space engineering majors surpassed computer science majors. The college is expanding rocket-related facilities and industry partnerships.” As of 2024, approximately 50,000 people in the LA area work in aerospace industries.

Rocket Launches Increase Sixfold in Five Years

The ‘game changer’ for the commercial space era is reusable rockets. Previously, rockets were single-use, but SpaceX’s success in reusing Falcon 9 first-stage boosters revolutionized the industry. Production costs plummeted, and frequent launches became feasible. According to foreign media, pre-reusability, launch costs were over $20,000 per kilogram, but Falcon 9 now costs around $2,000 per kilogram—a tenth of the original price.

At Vandenberg Space Force Base, a 2-hour drive from South Bay, rockets are launched 5–7 times monthly. Falcon 9 launches nationwide have surged: 25 in 2020, 61 in 2022, 96 in 2023, 134 in 2024, and 165 in 2025, setting annual records.

With proven cost-effectiveness, companies beyond SpaceX are accelerating reusable rocket development. Rocket Lab, based in LA, operates the partially reusable small rocket Electron and is developing the fully reusable Neutron. Brian Rogers, Rocket Lab’s vice president, stated, “Large rockets are expensive, but reusing them reduces costs without requiring excessive production speeds. Unlike past government-led projects that prioritized success over profitability, today’s commercial space companies base viability on cost efficiency.”