Targeting Space Data Center! Elon Musk's SpaceX confirms merger with xAI

On Monday, local time, Elon Musk’s SpaceX confirmed in a company memo that it is merging with xAI.

This means that recent market rumors have been settled. Last month, there were reports that SpaceX and xAI were in merger negotiations.

SpaceX (Space Exploration Technologies Corporation) is a rocket and satellite company founded by Musk in 2002, while xAI is an artificial intelligence (AI) company he established in 2023.

In the memo, Musk wrote that this deal will create “the most ambitious vertically integrated innovation engine on Earth (and beyond), covering artificial intelligence, rocket technology, space-based internet, direct mobile device communication, and a globally leading real-time information and free speech platform.”

The memo was initially sent to internal employees and was later published on SpaceX’s official website.

Musk also stated in the memo that this acquisition will enable the merged entity to establish data centers in space.

“This not only marks the beginning of a new chapter but also signifies the next phase of SpaceX and xAI’s mission: scaling up the creation of perceiving suns to understand the universe and extending the light of consciousness across the stars!” Musk wrote.

He further explained that current AI development relies on large ground-based data centers, which consume vast amounts of electricity and cooling resources. Even in the short term, relying solely on ground solutions cannot meet the global electricity demands of AI, which could severely impact communities and the environment.

“Long-term, space-based AI is clearly the only way to achieve scalable growth. Even utilizing a tiny fraction of solar energy, the required energy would be over a million times more than what current human civilization consumes!” Musk said. “Therefore, the only logical solution is to move these resource-intensive projects to places with abundant energy and space.”

Musk also detailed the technical roadmap for transferring AI computing power to space in the memo.

SpaceX plans to launch 1 million satellites to form an orbital data center constellation, directly harnessing near-constant solar energy in space with extremely low operation and maintenance costs.

Musk estimates that launching 1 million tons of satellites annually, with each ton generating 100 kilowatts of computing power, will add 100 gigawatts of AI computing capacity each year.

Musk predicts that within two to three years, generating AI computing power in space will become the most cost-effective method. This cost efficiency will enable companies to train AI models and process data at unprecedented speeds and scales.

In fact, Musk previously expressed the idea of building data centers in space during a meeting with all xAI employees at the end of last year.

Musk has stated that SpaceX will deploy orbital AI data centers in the coming years that can efficiently utilize solar energy. Last Friday, SpaceX submitted an application to the U.S. Federal Communications Commission (FCC) to launch up to 1 million satellites to build an orbital data center network.

For xAI, merging with SpaceX will allow it to leverage SpaceX’s orbital data center network to develop more powerful AI models.

Additionally, the merger will provide funding support for xAI. It is reported that xAI burned through billions of dollars in 2024, while SpaceX plans to raise up to $50 billion in its upcoming IPO later this year.

xAI aims to compete with OpenAI and Google in the fierce AI race. The startup recently completed a $20 billion funding round, with a valuation of up to $230 billion. Meanwhile, SpaceX is valued at approximately $800 billion.

According to reports, the combined company is expected to be priced at about $527 per share, with a valuation reaching $1.25 trillion.

This major acquisition is Musk’s latest move to consolidate his business empire—his portfolio also includes Tesla, Neuralink (a brain-machine interface company), and The Boring Company (a tunnel construction firm).

(Source: Cailian Press)