Elon Musk’s SpaceX has taken over his artificial intelligence company xAI in a merger aimed at deploying space-based data centers, fusing the rocket maker’s launch capabilities with xAI’s AI systems to meet surging demand for computing power.
In an announcement, Musk called the combined effort “the most ambitious, vertically integrated innovation engine on (and off) Earth,” positioning the deal as a response to strains emerging in Big Tech’s breakneck AI buildout.
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The plan centers on a new constellation of satellites designed to operate as orbital data centers, directly harvesting solar energy in space to power AI computing. “By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute,” Musk said.
SpaceX said it aims to eventually deploy as many as 1 million satellites and leverage its next-generation Starship rocket to reach unprecedented flight cadence and payload capacity. The company has claimed Starship will soon fly as often as once per hour, carrying up to 200 tons per launch, enabling mass deployment of compute hardware in orbit.
Key financial details of the deal were not disclosed, and the companies did not provide a timeline for initial satellite deployments. Bloomberg reported the combined company could carry a valuation of about $1.25 trillion. xAI, which operates the Grok chatbot, was valued at $230 billion in a January funding round.
The merger further tightens Musk’s sprawling business empire, which spans Tesla and the social platform X, formerly Twitter. Musk merged X with xAI after acquiring Twitter in late 2022, and the new arrangement is expected to pool capital, computing resources and engineering talent to realize the space-based data center vision.
The consolidation could prompt scrutiny from regulators and investors over governance, valuation and potential conflicts of interest given Musk’s overlapping leadership roles. Questions could also arise over the movement of engineers, proprietary technologies and contracts among entities controlled by Musk.
SpaceX holds billions of dollars in federal contracts with NASA, the Defense Department and U.S. intelligence agencies—relationships that can trigger national security reviews of mergers and acquisitions if risks are identified.
The deal lands as SpaceX is reportedly targeting a mid-June initial public offering that could raise as much as $50 billion, according to U.S. media. The company dominates the global launch market with reusable rockets and operates the world’s largest satellite network via its Starlink broadband constellation.
Musk has previously argued against taking SpaceX public, citing the scrutiny Tesla faces as a listed company and warning that short-term market pressures could conflict with his long-term goal of settling Mars. But building and flying Starship—the largest rocket ever built—for missions to the Moon and Mars, while also standing up an orbital data center network for AI, will require vast new investment.
Much remains unknown, including the technical architecture of the satellites, how compute will be networked and cooled in orbit, and how latency-sensitive AI workloads would interface with Earth-based users. The companies did not specify how the project will comply with orbital debris rules or spectrum coordination for such a large constellation.
For now, Musk is betting that vertically integrating rockets, satellites and AI will unlock new scale and economics for compute—by going above the clouds rather than building more server farms on the ground.
By Abdiwahab Ahmed
Axadle Times international–Monitoring.
