The mood was celebratory at the ribbon-cutting for Muon Space’s San Jose, California, manufacturing facility in June. State, local, United States Space Force and Pentagon representatives lauded the startup and, more broadly, commercial innovation before touring the 12,000-square-meter plant where Muon is gearing up to produce as many as 500 satellites annually.

Muon CEO Jonny Dyer called expansion in San Jose “a strategic choice” because it offers “access to world-class aerospace, software, AI and manufacturing talent, along with a dense supplier network and close proximity to many of our customers and partners.” Plus, the San Jose area “has a deep talent pool in high-mix hardware manufacturing, and the Bay Area has a long history of scaled satellite production,” Dyer said by email.

Down the road in Sunnyvale, about 20 miles away, Lockheed Martin has produced satellites, payloads and subsystems for decades. Lockheed’s work in the area dates back to World War II aircraft maintenance at Moffitt Field. Lanteris Space Systems, formerly Maxar, also has a history of assembling, integrating and testing spacecraft nearby.

“This ecosystem allows us to move faster from design to production and continuously iterate as mission requirements evolve,” Dyer said.

While Silicon Valley and the Los Angeles metropolitan area have impressive satellite-manufacturing legacies, California’s reputation as a space-technology hub suffered in recent years when Aerojet Rocketdyne, SpaceX, Made in Space and Orbit Fab announced plans to move headquarters or manufacturing out of state. In many cases, company executives — most notably SpaceX’s Elon Musk — cited California’s high cost of living, stringent regulations and financial incentives offered by Colorado, Florida and Texas.

Now, satellite manufacturing is flourishing in Colorado, Florida, Texas and Washington, but it’s also booming in California despite some big name departures.

In the last three years, some of the industry’s fastest rising companies including Aerospacelab, Apex, Astranis, K2 Space, Millennium Space Systems, Muon, Terran Orbital, True Anomaly, Umbra and Xona Space Systems have opened California manufacturing plants or expanded existing facilities.

California, with roughly 40 million people and a $4.3 trillion 2025 gross domestic product, ranked number one in manufacturing sector employees, according to the 2022 census, the most recent national analysis.

The surge in manufacturing extends to other space systems. Vast commercial space stations, Rocket Lab engines and Relativity Space rockets are produced in Long Beach, in Los Angeles County.

“California played a key part in building the modern aerospace economy. That is the foundation that we build on today,” said Emily Desai, chief deputy director at Gov. Gavin Newsom’s Office of Business and Economic Development, known as GO-Biz.

What’s the draw?

The attraction for many space companies has been simple: the people.

“Southern California continues to be the largest concentration of non-software engineering talent,” said Van Espahbodi, Generational Partners general partner and Starburst Aerospace co-founder and former managing partner. “Even though it’s an expensive place to build a space company, it can be even more expensive to build one without the right people. Fundamentally, you go where the talent is.”

California’s workforce includes 10,000 aerospace engineers and people with expertise in quantum computing, artificial intelligence and semiconductors, Desai said.

“If you open up a satellite and look at it, what you’re going to see looks a lot more like the inside of a desktop computer than it does a 747” airliner, said Brian Manning, co-founder and chief executive of precision positioning, navigation and timing startup Xona. “It’s a computer that we launch into space. So, we’re looking for software engineers, electrical engineers, mechanical engineers. The Bay Area talent pool fits that mix well.”

In Southern California, aerospace companies have established ties with community colleges to support education and training for welders, electricians and other trades that support advanced manufacturing.

“What makes California unique is not only the engineering talent, but also the technician talent,” Karan Kunjur, K2 Space co-founder and chief executive, said by email. “The greater LA area has a deep pool of talented technicians who are foundational to building any major aerospace company.”

Access to capital

Another draw is funding. More than 2,000 venture capital firms including prominent space investors call California home.

And while those firms bankroll businesses around the world, it’s helpful when entrepreneurs and investors can build relationships over coffee or dinner, said Mark Matossian, Whipsmart Ventures founder and managing partner and former Iceye U.S. chief executive.

One-third of U.S. space-technology companies are in California. In the last five years, more than half of U.S. venture capital funding for space technology went to California companies, according to a report prepared for GO-Biz by Lightcast, an economic modeling firm.

In contrast to other states, California does not attract companies with financing packages. “We don’t write blank checks,” Desai said. Instead, the state awards tax incentives for hiring and investment.

In June, Gov. Gavin Newsom awarded a $32.75 million California Competes Tax Credit to Vast for creating 657 new jobs and spending $87 million to expand its Southern California research, development and manufacturing facilities. Similarly, Apex collected a $24 million tax credit in April and True Anomaly obtained a $12.7 million credit in 2025 for investing in satellite manufacturing and expanding their workforces.

State strategy

Companies also remain in California to be close to partners and customers.

“Los Angeles is one of the centers of the global space industry,” Ian Cinnamon, Apex chief executive and co-founder, said by email. “The engineers, technicians, suppliers, customers and experienced operators we need are already here, and that concentration of talent matters when you are trying to build and scale a new kind of aerospace manufacturing company.”

Potential customers include the Space Systems Command, the U.S. Space Force acquisition arm based in Los Angeles that managed a $15 billion budget in 2025.

California houses three of NASA’s 10 centers: the NASA Jet Propulsion Laboratory, NASA Ames Research Center and NASA Armstrong Flight Research Center.

Access to Vandenberg Space Force Base on California’s Central Coast is another benefit. To meet increasing demand for launch capabilities, California awarded

$9.5 million to REACH, a Central Coast economic-action coalition to augment Vandenberg infrastructure and support workforce development.

Tax credits and Vandenberg funding stem from the California Jobs First Economic Blueprint, published in 2025, which identified aerospace as a “strategic sector to focus on and prioritize,” Desai said. “When we created this statewide strategy, we identified pilot sectors to put a whole-of-government approach into supporting and maintaining. Space, defense and satellites was one because we know the legacy of this sector, but also where it’s going. We want to do everything we can to keep it here, to keep it growing.”

A real estate solution

Years ago, space companies complained about the high cost of California real estate, which was more of a problem when firms required facilities spacious enough for satellites the size of a school bus.

Since smaller satellites now dominate the market, “people are building whole constellations in classic Silicon Valley one-story office parks,” said Matossian, former head of program management and satellite production for Terra Bella, an Earth observation satellite startup acquired by Planet Labs in 2017. “For Terra Bella satellites, we set up a mobile clean room. At Iceye, we built satellites in a converted conference room.”

In the wake of the pandemic, roughly 16% of Silicon Valley offices remain vacant.

“All you have to do is drive down [Highway] 101 and look at all this delicious Class A office space that has been empty since the beginning of the pandemic,” Matossian said. “It’s practically free.”

Surrounding ecosystem

In April, Xona invited guests to a new facility in Burlingame, south of San Francisco, where it manufactures satellites and payloads for the Pulsar global navigation satellite system constellation. Xona’s Silicon Valley neighbors include companies developing autonomous vehicles, robotics, AI logistics, device trackers and cell phones that could adopt Xona technology.

“A lot of the best tech in the world is located in the Bay Area,” Manning said. “It’s good for us to be located in the same place as our customers.”

The founders of Xona, like the founders of Terra Bella predecessor Skybox Imaging, met at Stanford University. Stanford, California Institute of Technology, University of Southern California, California Polytechnic State University and University of California campuses supply a constant stream of engineers and entrepreneurs.

Initially, aerospace engineers may find jobs with SpaceX, Northrop Grumman, Boeing, Lockheed Martin, Raytheon or one of the new satellite manufacturers. Once they gain experience, they often gravitate to startups or establish their own.

“Here in LA, there is no question that the amount of talent that’s coming out of the universities is part of the equation” fueling the rise in manufacturing, David Barnhart, director of the USC Space Engineering Research Center, said in an interview. “People complain about the high cost of living and the high cost of doing business in the state, but in general those negatives are outweighed by the positives. California has become an aggregator of the key suppliers, the key vendors and spacecraft integrators. That allows companies to move very fast.”

This article first appeared in the August 2026 issue of SpaceNews Magazine.