SpaceX is moving further away from being just a space and satellite company, signing a multibillion-dollar deal to provide computing power to AI startup Reflection AI.
It comes as yet another part of the founder’s efforts to make the company a key participant in building the future of artificial intelligence infrastructure. According to the agreement, Reflection AI will pay about $150 million per month to the AI wing of SpaceX, SpaceXAI, beginning in July and going on until 2029.
Reflection AI will use its computing power at the Colossus 2 data center operated by SpaceX in Memphis, Tennessee.
Although significant in scale, it is not permanent. The contract can be terminated by either party with 90 days’ notice.
Why is the deal important?
In terms of Reflection AI, the agreement solves an old issue in the sector, which is access to computing power. Developing such infrastructure that will help create and maintain advanced models of artificial intelligence is incredibly costly and requires much time. Startups have difficulties securing sufficient capacity from leading cloud companies.
Accessing SpaceX’s data centers allows Reflection AI to ensure consistent availability of high-quality computing without developing its own backbone infrastructure.
For SpaceX, this agreement is one element of its strategic transformation, during which it seeks to monetize its infrastructure not only through rockets and satellites but also through computing for artificial intelligence workloads.
Reflection AI deal not alone for the firm
In the weeks before SpaceX goes public, it has signed a number of important agreements with other AI-related organizations. The company has recently signed contracts with Google, which is a subsidiary of Alphabet, as well as with AI company Anthropic; both companies have agreed to rent their computing capacity from the SpaceX data center.
The contract between SpaceX and Google is worth around $30 billion until 2029; similarly, the contract between SpaceX and Anthropic is estimated to be worth close to $45 billion during the same time period. Both agreements include a provision allowing for early termination, just like the one that was made with Reflections.
All of these contracts indicate that SpaceX is moving away from the role of a typical aerospace organization and is becoming an infrastructure-as-a-service vendor.
This trend can be seen throughout the entire tech industry; as AI technology becomes more advanced, its implementation requires huge amounts of computing power, which is sought by different companies years in advance.
But it’s a big shift for a company known more for rockets, reusable boosters and satellite internet. Competing in cloud computing means competing against established behemoths that already own most enterprise workloads.
But the demand is on their side for now. AI companies require computing power at a scale that is hard to come by, and SpaceX is positioning itself as a new supplier.
Should these deals go through, they could mark a turning point, not only for SpaceX, but also for how AI infrastructure is built, financed, and distributed.
