Two Democratic senators in the U.S. asked the Pentagon to conduct an immediate review of SpaceX amid allegations that the Chinese investors have secretly acquired stakes in the company. The senators have cited potential national security risks, according to Reuters.
Senators Elizabeth Warren and Andy Kim wrote to Defense Secretary Pete Hegseth expressing concern that Chinese investment in SpaceX could present “a national security threat, potentially jeopardizing key military, intelligence, and civilian infrastructure.” The lawmakers cited media reports and court testimony suggesting that investors with ties to China routed funds through entities in the Cayman Islands and British Virgin Islands to mask purchases of SpaceX shares.
SpaceX, which was founded by billionaire Elon Musk, plays a central role in U.S. national security infrastructure. The company is responsible for launching military and intelligence satellites and operating its Starlink communications network, which is used by the Pentagon and to support Ukraine’s defense.
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The senators stated that any Chinese ownership could trigger U.S. rules governing foreign ownership, control or influence, known as FOCI, given the potential exposure of sensitive information or technologies. They asked via the letter to disclose any Chinese ownership, assess whether SpaceX is subject to FOCI mitigation requirements, and determine whether foreign investments should be reviewed by the Committee on Foreign Investment in the United States. The senators requested a response by Feb. 20.
SpaceX recently went through a merger with xAI, also owned by Musk. As per Forbes, the deal valued the combined entity at $1.25 trillion, giving a boost to Musk’s personal fortune by $84 billion to a staggering $852 billion. The merger restructured Musk’s holdings, and gave him 43% stake in the newly combined company which is estimated to be $542 billion.
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The deal is one of the most ambitious tie-ups in the technology sector. Investors in xAI will receive 0.1433 shares of SpaceX for every share of xAI as part of the deal, a person familiar with the matter told Reuters. Some xAI executives may also opt for cash instead of SpaceX stock at $75.46 per share.
“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!” Musk said.
The merger also positions the combined entity for what could be one of the largest initial public offerings (IPOs) in history, reportedly planned for later this year. Market watchers suggest that an IPO of this scale would not only raise unprecedented capital but also redefine the valuation benchmarks for tech and aerospace firms, setting a new standard for investor expectations.