SpaceX’s 32% dive puts xAI-Tesla AI chip plant at center of merger talks

The merger thesis rests on a logic of simplification and synergy. Over the past year, Musk has already consolidated his ventures: xAI acquired X (formerly Twitter) in 2025, and earlier this year SpaceX absorbed xAI. Yet Tesla remains the outlier, housing the bulk of his ambitions in robotics, energy storage, and autonomous vehicles. Bringing Tesla into the fold would eliminate the operational confusion of separate corporate structures and unleash cross-entity collaboration. The centerpiece of this vision is Terafab, a massive chip plant announced in March as a joint effort among Tesla, xAI, and SpaceX, with Intel joining as a foundry partner in April. Merging them under one roof would streamline resource allocation, R&D, and investor messaging.

The sell-off itself reflects market fears about lofty valuations and the complexity of Musk’s web of companies. While SpaceX’s IPO raised $75 billion, investors are increasingly wary of governance risks, potential conflicts of interest, and the sheer breadth of Musk’s obligations across Tesla, SpaceX, X, and xAI. A merger could address those concerns by creating a single, transparent entity, but it would also raise antitrust and regulatory flags, particularly in defense-sensitive SpaceX operations. For long-term investors, the argument is that a combined company would possess unparalleled vertical integration: from satellite internet and launch services (SpaceX) to electric vehicles, batteries, and solar (Tesla), underpinned by custom AI chips and a social media platform. The near-term pain of the stock crash may thus catalyze a transformative deal that reshapes the tech and industrial landscape.