Exclusive: SpaceX targets in-house GPUs as it warns investors of chip supply, costs

NEW YORK, April 23 (Reuters) - SpaceX may be tackling one of the biggest challenges in the chip business: manufacturing the keys to powering artificial intelligence called graphics processing units, or GPUs.

Ahead of SpaceX's $1.75 trillion IPO expected this summer, the company has warned prospective investors of its big spending plans to develop AI and other technologies.

It lists "manufacturing our own GPUs" among the "substantial capital expenditures" it is undertaking, according to excerpts of its S-1 registration reviewed by Reuters. Companies file this document to the U.S. Securities and Exchange Commission to disclose their risks and finances before going public.

SpaceX did not immediately respond to a request for comment, and the size of the expected expenditure could not be determined.

The ambition follows work by ⁠SpaceX, its xAI unit and Tesla to jointly develop the Terafab, an advanced AI chip manufacturing complex that CEO Elon Musk is planning in Austin, Texas.

Though Musk has said the project would target chips for cars, humanoid robots and space-based data centers, many details - including the types of AI chips, such as GPUs, it would produce - have been unknown.

There are a range of approaches for chips that power AI. For example, Nvidia (NVDA.O), opens new tab largely makes GPUs, which are general purpose and good at performing a wide array of data crunching tasks. Alphabet's (GOOGL.O), opens new tab Google takes another approach with its tensor processing units (TPUs), which are tuned to perform specific functions, key to building AI models and running chatbots such as Anthropic's Claude.

It was unclear when SpaceX plans to manufacture its own chip and which companies - the Terafab developers or their partner Intel - would handle the fabrication technologies inside the plant.

Musk told Tesla analysts on Wednesday that by ⁠the time Terafab scales up, Intel's next-generation 14A manufacturing process "will be probably fairly mature or ready for prime time" and "seems like the right move."

It was also unclear if SpaceX, in its filing, used the term GPU as shorthand for AI processors generally.

Still, the previously unreported plans for GPU production come as SpaceX warned investors that it may not have enough chip supply to power its growth.

SUPPLY CONCERNS

"We do not have long-term contracts with many of our direct chip suppliers," SpaceX said in the ⁠S-1 registration. "We expect to continue sourcing a significant portion of our compute hardware from third-party suppliers, and there can be no assurance that we will be able to achieve our objectives with respect to TERAFAB within the expected timeframes, or at all."

Manufacturing GPUs is not easy. Industry heavyweight Nvidia pioneered GPU design and, like much of ⁠the industry, outsources their manufacture to Taiwan's TSMC (2330.TW), opens new tab.

TSMC has spent billions of dollars and years developing its most advanced manufacturing processes, which for cutting-edge chips require exotic materials and executing more than a thousand steps with atomic precision. Its years of manufacturing billions of Apple's iPhone chips have afforded it ⁠an enormous amount of the required hands-on experience to produce cutting-edge processors.

The chip industry, as it is organized, now splits steps such as fabricating, packaging and testing among several discrete companies. Musk has said the Terafab will handle each step of chip production, including the design as well.

Reporting by Echo Wang in New York, Jeffrey Dastin and Max A. Cherney in San Francisco; Editing by Kenneth Li and Kim Coghill

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Echo Wang

Thomson Reuters

Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

Jeffrey Dastin

Thomson Reuters

Jeffrey Dastin is a correspondent for Reuters based in San Francisco, where he reports on the technology industry and artificial intelligence. He joined Reuters in 2014, originally writing about airlines and travel from the New York bureau. Dastin graduated from Yale University with a degree in history. He was part of a team that examined lobbying by Amazon.com around the world, for which he won a SOPA Award in 2022.

Max A. Cherney

Thomson Reuters

Max A. Cherney is a correspondent for Reuters based in San Francisco, where he reports on the semiconductor industry and artificial intelligence. He joined Reuters in 2023 and has previously worked for Barron's magazine and its sister publication, MarketWatch. Cherney graduated from Trent University with a degree in history.