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Hughes Space and Communications International, Inc. of the United States has notified the National Space Development Agency that it will cancel its contract to launch satellites aboard NASDA’s next-generation H-IIA rocket, it was learned Thursday.

The cancellation of the nearly 90 billion yen project, which follows the failure of two successive H-II launches, has dealt a severe blow to Japan’s rocket industry, which was aiming to enter the international satellite-launching market. Hughes, a commercial satellite maker, initially planned to launch 10 satellites aboard H-IIAs, which are currently being developed by NASDA.

But Hughes, which is believed to have become concerned about Japan’s space technology following the H-II launch failures, notified NASDA of its plan to pull out of the contract through the Tokyo-based Rocket System Corp., which provides rocket-launching services. Hughes can unilaterally cancel the contract in the event of two consecutive launch failures.

Last November, a 24 billion yen H-II and its satellite exploded in flight. In February 1998, a 36 million yen satellite was lost in space after successfully separating from an H-II. The November failure forced NASDA to postpone its first H-IIA launch until at least next February.

The planned merger between Hughes and Boeing Corp., which also makes rockets, is also believed to have influenced Hughes’s decision.

According to sources close to NASDA, Hughes had already paid 3 billion yen in advance to Rocket System and will probably demand that the money be paid back.

Rocket System, which successfully launched the first H-II in 1994, succeeded in sending five satellites into space by 1997. It concluded its contract with Hughes in 1996.

The H-IIA is an improved version of the H-II that can lift a satellite into geostationary transfer orbit at a cost of about 8.5 billion yen, nearly half the cost if launched by an H-II.