Elon Musk recently announced what seemed like an odd pairing of his companies: SpaceX was acquiring xAI, the artificial intelligence firm that also owns the social media platform X.<\/p>\n
The merger combines a highly profitable rocket company with an AI startup that is burning through billions of dollars as it competes with OpenAI and other rivals for dominance in artificial intelligence.<\/p>\n
The merger also comes as SpaceX \u2014 whose primary business of late has been launching Musk\u2019s Starlink broadband satellites \u2014 readies for an initial public offering<\/a>, possibly for this year.<\/p>\n The merged companies are valued at $1.25 trillion. That is higher than recent separate valuations of SpaceX at $800 billion and xAI\u2018s holding company at $230 billion. IPO shares are expected to price at roughly $525.<\/p>\n \u201cI think it provides a narrative for the merging of SpaceX and xAI, sort of a cash generative business and a business that needs cash \u2014 at a pretty spectacularly high valuation,\u201d said Steve Collar, chairman of Swissto12, a Swiss satellite maker.<\/p>\n Although the merger may make financial sense, there is far more to it than that. Here\u2019s what to know about the plan. <\/p>\n This seems like an unlikely marriage. Why is Musk doing this? <\/b><\/p>\n Aside from the financial benefits, there are technical reasons. Musk has sketched out a futuristic plan that involves sending up to a million satellites \u2014 called data centers \u2014 into an orbit, where the sun could power them all day and night while they do artificial intelligence computations.<\/p>\n What exactly is a satellite data center?<\/b><\/p>\n The basic concept is simple. The satellite\u2019s primary function would be to do computations on specialized chips, powered by solar panels in a \u201csun-synchronous orbit\u201d that keeps them exposed 24\/7 to the sun\u2019s powerful rays.<\/p>\n Aren\u2019t hundreds of billions of dollars already being spent building AI data centers on Earth?<\/b><\/p>\n Musk insists that within three years it will be cheaper to have AI data centers in space rather than the hyperscale data centers now being built on Earth because of the strain on the power grid \u2014 a timeline that some experts have questioned. <\/p>\n But isn\u2019t launching <\/b>1<\/b> million satellites into orbit far-fetched?<\/b><\/p>\n Some think so. Indeed, the proposed number of launches is nearly 100 times more than the roughly 11,000 Starlink broadband satellites that SpaceX has sent into space since 2019 on its workhorse Falcon 9.<\/p>\n However, Musk is counting on using his massive Starship rocket<\/a>, which is under development and can lift more than five times the payload.<\/p>\n \u201cIf you\u2019re going to deploy a whole bunch of additional satellites, you\u2019re creating this huge need for Starship,\u201d Collar said.<\/p>\n Still, that seems like an inordinate number of launches.<\/b><\/p>\n There is no doubt about that. In a blog post<\/a>, Musk talked about launching every hour to deliver millions of tons of satellites into orbit each year. <\/p>\n However, Collar said a functioning network of AI data centers in space could be much smaller, with 10,000, 50,000 or as many as 100,000 satellites. \u201cI think with Elon, it\u2019s kind of this all-or-nothing thing,\u201d he said.<\/p>\n How far along is the development of space-based AI data centers?<\/b><\/p>\n Not very. It was only in November that Google announced Project Suncatcher<\/a>, which it said is exploring an \u201cinterconnected network of solar-powered satellites\u201d equipped with its own chips. And Starcloud, a year-old startup<\/a> in Redmond, Wash., backed by Andreessen Horowitz and other major venture capital firms, launched a demonstrator satellite in November.<\/p>\n \u201cI would say you are talking about the 2040 time frame before you\u2019ve got any sort of usable system,\u201d Collar said.<\/p>\n What are the technological challenges?<\/b><\/p>\n The first obstacle to overcome is to develop a computer chip that works in the extreme conditions of space, which includes exposure to much higher levels of radiation.<\/p>\n \u201cIf you want to take an Nvidia chip and make it work in space, you would probably need to invest a few years and many millions of dollars to make it what\u2019s called space qualifying to make sure that it isn\u2019t damaged by radiation,\u201d said Ehud Behar, an astrophysicist at the Technion \u2014 Israel Institute of Technology.<\/p>\n Are there any drawbacks to a sun-synchronous orbit?<\/b><\/p>\n Yes. It exposes satellites to a lot of heat and the way to dissipate the heat generated by the sun and the computer chips would be to use large aluminum panels called radiators, but they are inefficient, Behar said.<\/p>\n \u201cYou\u2019re going to need to build large surfaces to radiate the heat away. That\u2019s part of the challenge. I don\u2019t think these can be these small satellites. The mass has to be large enough to make it cost effective,\u201d he said.<\/p>\n How does SpaceX propose to getting all that data back to Earth?<\/b><\/p>\n In a Federal Communications Commission application<\/a>, SpaceX describes how the centers would transmit the data via optical, or laser, signals to the Starlink network for transmission to the ground while the entire system is in a low orbit roughly 300 miles to 1,200 miles above Earth.<\/p>\n Is there a technological challenge to that too?<\/b><\/p>\n Yes. Collar said that satellites in such an orbit circle the globe roughly every 90 minutes, making it tricky for them to communicate with one another. A potentially better idea would be to station the ground communications satellite in a higher orbit where it would circle the Earth at a much slower pace and its transmissions to the ground would cover a larger area.<\/p>\n \u201cBut launching into lower Earth orbit is so much cheaper, so all of this is a gigantic [trade-off] and that\u2019s what makes it really interesting,\u201d he said.<\/p>\n In a blog post, Musk also talked about how all <\/b>these<\/b> data will eventually be accessible on mobile phones from anywhere on Earth on a network he is building. How would that work?<\/b><\/p>\n SpaceX bought $17 billion worth of wireless spectrum<\/a> in September from EchoStar, boosting a partnership it already had with T-Mobile that allowed customers to text when they are off the grid<\/a>. It followed that up with an additional $2.6-billion purchase of EchoStar spectrum a month later. <\/p>\n