A high-temperature plasma sheath is generated on the surface of the re-entry vehicle through the conversion of kinetic energy to thermal and chemical energy across a strong shock wave at the hypersonic speed. Such a condition results in the forming of a blackout which significantly affects the communication components. To analyze the re-entry vehicle at the hypersonic speed, an unconditionally stable system incorporated factorization-splitting (SIFS) algorithm is proposed in finite-difference time-domain (FDTD) grids. The proposed algorithm shows advantages in the entire performance by simplifying the update implementation in multi-scale problems. The plasma sheath is analyzed based on the modified auxiliary difference equation (ADE) method according to the integer time step scheme in the unconditionally stable algorithm. Higher order perfectly matched layer (PML) formulation is modified to simulate open region problems. Numerical examples are carried out to demonstrate the performance of the algorithm from the aspects of target characteristics and antenna model. From resultants, it can be concluded that the proposed algorithm shows considerable accuracy, efficiency, and absorption during the simulation. Meanwhile, plasma sheath significantly affects the communication and detection of the re-entry vehicle.