Musk solves the power generation bottleneck! SpaceX (SPCX.US) plans to produce its own "gas turbine blades."

Facing the industry-wide pain point of power shortages at AI data centers, Elon Musk is once again employing his characteristic vertical integration approach, attempting to tackle the weakest links in the supply chain to forcefully break through the bottleneck. On August 30, the tech media outlet The Information reported that SpaceX is planning to build a foundry in Bastrop, Texas, specifically to produce blades and vanes for large gas turbinesthese are the core components in the global turbine supply chain with the highest technical barriers and the most scarce production capacity. Following the report, Musk personally confirmed this plan on the social media platform X, stating that SpaceX's in-house production of blades and vanes could bring the time of gas turbines forward by up to 18 months, describing it as "a profound game changer." Musk further indicated that SpaceX and Tesla are rapidly setting up CECEP Solar Energy production capacity to each generate 100 GW annually, but "in the coming years, natural gas will still be a necessary option to supplement and guide CECEP Solar Energy." At the same time, Morgan Stanley analyst Adam Jonas' research corroborated the report, pointing out that the foundry will also accommodate the casting needs for SpaceX's Raptor rocket engine turbine pumps, thus achieving cost-sharing between aerospace and AI operations. Blades: The 'Invisible Bottleneck' Stalling Global AI Compute Expansion The report noted that gas turbine blades and vanes must operate at extreme high temperatures of 3,000 to 3,600 degrees Fahrenheit (approximately 1,650 to 1,980 degrees Celsius), which is about 800 degrees Fahrenheit above the melting point of the materials, imposing very strict requirements on the casting process. Currently, only four foundries worldwide possess this technology, resulting in a highly monopolized market. This oligopolistic structure directly leads to large turbine manufacturers like GE Vernova having orders booked through 2030, making it one of the core obstacles in accelerating AI infrastructure development. In February of this year, Musk bluntly stated in a podcast that blades and vanes are "the limiting factor" for faster turbine delivery and warned that with current production capacity, "I'm not sure there will be enough available power to start all the AI chips being produced." From Satellite Factory to Turbine Foundry Reports state that SpaceX has been laying the groundwork for several industrial facilities in Bastrop, about 30 miles from Austin. The company has previously operated a facility related to the Starlink satellite business in the area. Corey Trinetti, a due diligence expert from Measured AI, disclosed that SpaceX purchased about 830 acres of land in the vicinity between March and June of this year. Satellite images show that two new buildings adjacent to the Starlink plant have appeared in July, while there were no structures there a year prior. On the recruitment front, SpaceX has recently posted multiple job openings, including senior operations engineers, senior materials engineers, automation engineers, senior tooling engineers, and a programmer responsible for high-temperature superalloy milling programming on the new "Industrial Gas Turbine (IGT) blade and vane manufacturing line" in Bastrop. However, Trinetti noted that no permits or building registration documents for the foundry have yet been found in Texas environmental or construction records, leaving the status of SpaceX's approval process unclear. Dual Purpose: Cost Sharing Between Aerospace and AI Morgan Stanley's Adam Jonas pointed out in a report this month that SpaceX is establishing a turbine parts foundry in Texas that will serve both data center demands and the casting production for the Raptor rocket engine turbine pump. "The Raptor turbine pump castings and the turbine airfoil components for data centers use the same alloys, furnaces, and skilled workers; a single foundry can spread fixed costs across both aerospace and AI businesses," Jonas stated. This dual-purpose logic significantly enhances the commercial viability of the foundry, leading observers to cautiously monitor whether SpaceX can truly replicate decades of casting processes accumulated by industry leaders like Precision Castparts. Transitional Period: Acquiring Bridging Power Through Acquisitions and Collaborations Before the establishment of its own foundry capacity, Musk is seeking gigawatt-level transitional power supplies through multiple channels. According to The Information, Musk has recently been quietly collaborating with Wall Street hedge fund Fortress Investment Group, which has invested in at least two turbine suppliers. According to filings with the Federal Trade Commission from May this year, Fortress has sold mobile industrial turbine supplier APR Energy to Musk himself. APR Energy indicated in January this year that its fleet has about 1 GW of turbines, meaning this asset will be available to Musk. Additionally, SpaceX may be procuring turbines from FTAI Aviationa company specializing in modifying and refurbishing commercial aircraft engines. TAI is a spin-off of another Fortress-owned company, which announced a $1.465 billion turbine sales contract through its Chinese joint venture partner in July this year, with the buyer identified as "a leading international cloud service provider." Adam Jonas has identified FTAI as a potential supplier for SpaceX. Morgan Stanley estimates that Musk could secure about 3 to 4 GW of power through a series of procurement agreements by the end of 2027. Carbon Emission Controversies and Industry Disagreements However, the report noted that Musk's moves to further release fossil fuel power generation capacity have raised concerns among low-carbon energy advocates. BloombergNEF estimates that if all planned off-grid natural gas projects for data centers are realized, U.S. carbon dioxide emissions could increase by 20%. This figure does not yet include Musk's latest plans but already accounts for the xAI division of SpaceX's planned 2 GW off-grid natural gas installation in Memphis, Tennessee, expected to come online by the end of the year. There are noticeable disagreements in the industry regarding whether Musk can truly achieve this ambitious plan. Dylan Patel, founder of semiconductor research firm SemiAnalysis, believes Musk can do it; meanwhile, Jigar Shah, a clean energy entrepreneur who previously led Biden's administration's energy loan office, countered directly, stating, "It's because you simply do not know how to build infrastructure." Musk previously astonished the industry with the rapid establishment of the Memphis Colossus data centerdespite the facility's quality not being top-tier, SpaceX has already secured considerable revenue by leasing the facility to Anthropic. Analysts point out that whether this gamble on power can replicate that speed remains closely observed by the market. This article is reproduced from "Wall Street Insight," author: Dong Jing, GMTEight editor: Zheng Yuyang.