SpaceX is the new Amazon.com.
The latter has been a disruptive force for decades, remaking the retail industry and threatening traditional players in shipping, media, IT infrastructure, and others.
After pioneering reusable rockets, SpaceX is taking aim at AI, telecommunications, semiconductors, and aerospace. It might even disrupt manufacturing, upending years of dogma about outsourced parts and just-in-time delivery.
SpaceX sent a shockwave through the aerospace supply chain on Monday when CEO Elon Musk tweeted that "Casting of blades & vanes is the most significant limiting factor for power until solar AI satellites are launched at scale," implying his rocket and AI company would get into power-turbine casting and blade manufacturing.
The news sent shares of GE Vernova, which makes power turbines, and Howmet Aerospace, which casts blades, down 1.5% and 7.5%, respectively.
Musk has always looked to control production bottlenecks, which is one reason Tesla and SpaceX are building a semiconductor manufacturing facility together. Musk believes chips will be in short supply as AI applications, including robots, proliferate.
And the company is no stranger to vertical integration. RBC analyst Ken Herbert estimates that SpaceX makes about 90% of the parts that end up in its rockets. That number for a Boeing jet would be closer to 40%.
SpaceX's approach is a different way of doing things. "We're going through a new consideration in manufacturing production," said Adrian Helfert, chief investment officer at asset manager Westwood Holdings Group. Instead of whittling down inventories and leaning heavily on suppliers, which has been the strategy for decades, SpaceX is after more control so it can innovate faster.
To be sure, SpaceX had to vertically integrate. It essentially invented the modern space industry. The existing supply chain couldn't support the scale and pace at which SpaceX moved.
Still, the company's speed and ambition are making several others nervous. SpaceX disrupted space, but that disruption dramatically increased the market size, creating new opportunities for others. SpaceX's low-cost rockets, however, have enabled applications, such as Starlink, SpaceX's space-based broadband product, which is threatening the telecommunications industry. SpaceX has also talked about offering point-to-point hypersonic travel on Earth, using its rockets to disrupt commercial jets.
One silver lining for the disrupted: If Musk is doing it, it means he sees a big opportunity. That can be good for the existing players, too. Take the turbine blades. If SpaceX makes them, it's because Musk sees no way the existing industry can make enough, so there's some business for others.
SpaceX stock gained 1.6% on Monday after Musk's manufacturing revelation. Shares were down 1% in premarket trading on Tuesday, while S&P 500 and Dow Jones Industrial Average were both down about 0.5%
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