SpaceX to Raise 54 Trillion Won in Debt to Buy NVIDIA Chips

Raising $40 Billion to Purchase Chips
Utilizing Bank Loans and Corporate Bond Issuance
SpaceX’s Debt Burden Expected to Increase

As the global race for artificial intelligence (AI) intensifies, SpaceX, the space company led by CEO Elon Musk, is reportedly seeking to raise about KRW 54 trillion from outside investors to purchase AI semiconductors from Nvidia.

Nvidia CEO Jensen Huang (right) shakes hands with SpaceX CEO Elon Musk at an event marking the launch of the federal portal website America.gov in Washington, D.C., on the 29th of last month (local time). AP-Yonhap News

The Financial Times (FT) reported on October 7, citing sources, that SpaceX plans to raise $40 billion to fund purchases of Nvidia chips. The company plans to borrow $10 billion from banks and issue $30 billion in investment-grade corporate bonds.

PIMCO, the world’s largest bond manager, is considering an investment, while U.S. private equity firm Apollo Global Management is reportedly leading the overall financing. However, negotiations are still at an early stage, and the deal could fall through. It is expected to be finalized next year.

The fundraising is also expected to strengthen ties between SpaceX and Nvidia. At an earnings presentation last August, CEO Musk praised Nvidia, saying, “We decided to build exclusively on Nvidia because we determined that the Vera Rubin architecture is the best architecture,” and calling it “the best AI computer.” Vera Rubin is Nvidia’s next-generation AI platform.

Apollo, which is leading the fundraising, has also been involved in a financing deal connecting Nvidia with xAI, Musk’s other AI company. Apollo reportedly provided $7 billion to help xAI secure Nvidia chips.

However, market concerns are mounting over SpaceX’s debt burden. SpaceX received investment-grade ratings after completing an $86 billion initial public offering (IPO) in June. Investors were particularly unsettled when the company issued $25 billion in corporate bonds less than two weeks after the IPO.

In the secondary market, the corporate bonds are being treated as close to speculative-grade “junk bonds.” The yield on SpaceX bonds maturing in 2056 is about 2.27 percentage points higher than that on U.S. Treasury bonds. This means investors view the bonds as riskier and demand higher returns when trading them.

As AI developers pour astronomical sums into securing data centers and semiconductors, large-scale financing deals are also occurring one after another in financial markets, Bloomberg reported. Broadcom and Wall Street financial firms have also pursued a $60 billion financing deal to help Anthropic and other companies secure AI chips and computing infrastructure.

This content was produced with the assistance of AI translation services.