Musk merges xAI into SpaceX in bid to build data centers

AFP/APP

San Francisco: Elon Musk’s SpaceX has acquired his artificial intelligence company xAI in a move aimed at developing space-based data centers, the company said on Monday.

The merger combines SpaceX’s launch capabilities with xAI’s artificial intelligence technology to create what Musk described as “the most ambitious, vertically integrated innovation engine on (and off) Earth.”

The deal comes as funding pressures begin to emerge around the massive investments required for artificial intelligence infrastructure by major technology companies.

Musk said SpaceX plans to deploy a constellation of satellites designed to function as orbital data centers, powered by near-constant solar energy to meet the growing electricity demands of AI computing.

“These needs cannot be met on Earth without imposing hardship on communities and the environment,” Musk said, arguing that space-based computing offers a cleaner and more scalable alternative.

“By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute,” he added.

SpaceX aims to eventually launch up to one million data-center satellites using its Starship rocket, which the company says could soon reach launch rates of one flight per hour, each carrying up to 200 tons of payload.

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No financial terms of the acquisition were disclosed, nor was a timeline provided for the initial deployment of the satellites.

According to Bloomberg, the combined entity would have an estimated valuation of $1.25 trillion. The merger further consolidates Musk’s expanding business empire, which includes electric carmaker Tesla and social media platform X, formerly Twitter.

Musk previously merged X with xAI after acquiring Twitter in late 2022. xAI, which operates the Grok chatbot, was valued at $230 billion during a funding round in January.

The combined company is expected to pool capital, computing resources, and talent as Musk advances his vision of space-based AI infrastructure.

SpaceX is reportedly considering a mid-June initial public offering that could raise up to $50 billion, according to U.S. media. The company currently dominates the global space launch market with its reusable rockets and operates the world’s largest satellite constellation through Starlink.

Musk has previously opposed a SpaceX IPO, citing dissatisfaction with the scrutiny faced by publicly traded Tesla and arguing that market pressure for short-term returns conflicted with his long-term goal of settling Mars.

However, SpaceX’s current priorities — including the development of Starship, the largest rocket ever built, for future Moon and Mars missions — will require substantial new investment.