This Week in Dual-Use

NEWS

SpaceX acquires xAI

SpaceX acquired xAI in a deal that will value the company at $1.25tn. Both businesses are majority owned by Elon Musk.

Musk’s conundrum is that he has entered into competition with OpenAI, Google, Anthropic and other purveyors of capital-intensive technological wizadry. The stated rationale behind the deal is that the companies will work together to launch a fleet of data centres in space.

But this isn’t about space. The reality is that xAI, like its competitors, is a cash incinerator. Musk is looking to pipe some SpaceX revenues into xAI to fuel his rivalry with Sam Altman et al.

That is bad news for my prediction that SpaceX will become the world’s most valuable company.

Although this acquisition has minted the world’s most valuable private company, it will muddle SpaceX’s capital discipline by tying a generationally valuable launch and satellite business to an open-ended race in frontier AI. Infrastructure should not bankroll ego.

UK gives military more power to shoot down drones

The security of UK defence sites will be strengthened as the military is given stronger powers to defeat drones near its bases.

I have been banging the drum for some time about C-UAS. Regular readers of this newsletter will be familiar with my thesis: the market will be bigger than we think. Probably bigger than the UAS market itself.

Eventually it will be necessary to protect every airport, military base, police station, piece of critical national infrastructure, etc. The list goes on.

Just as drones come in many types and sizes, no single C-UAS methodology will dominate. Defences will be layered and overlapping. Cheap, attributable systems will trump expensive, exquisite ones. Technologies proven in Ukraine will be valued.

And as the market matures it will be interesting to see how government’s desire for sovereignty manifests. And how sovereignty is even defined.

Quantum computing for missile defence

D-Wave, a publicly traded quantum computing company, is partnering with Anduril and Davidson Technologies, an American defence modelling and simulation company, to develop a quantum-enabled targeting system.

What’s surprising here is the timeline. Most of the market, me included, believes that useful quantum computing is still a few years away. But this partnership is explicitly aimed at current missile defence planning.

For a long time we’ve had hand-waving on quantum applications in defence. In 2022 the UK MOD partnered with ORCA Computing to investigate putting a quantum computer directly into battlefield tanks. It was ahead of its time, it turns out.

Four years later, this new collaboration focuses on quantum-classical hybrid systems, not pure quantum computing. That points to a near-term deployment model and the possibility that usable quantum computing for defence may be closer than investors assume.

I am reminded that Silicon Valley itself was born as a defence-industrial ecosystem. Scientists in white coats developed the world’s most advanced technology for military use cases. Are we coming full circle?

IonQ acquires SkyWater

Meanwhile, IonQ, another publicly traded quantum computing company, acquired SkyWater, a publicly traded semiconductor manufacturer whose foundries are located exclusively in the US.

IonQ’s strategy is to acquire its way to market domination. Part of its narrative appears to be onshoring of manufacturing and American identity. That is likely to position it favourably with the current US administration.

FUNDRAISING

CesiumAstro, an American developer of phased-array satellites, raised a $270m Series C led by Trousdale Ventures.

Tomorrow.io, an American company developing a weather intelligence platform and satellite network, raised a $175m round co-led by Stonecourt Capital and HarbourVest.

Northwood Space, an American builder of satellite ground infrastructure, raised a $100m Series B led by Washington Harbour Partners.

Overland AI, an American developer of autonomous ground vehicles (AGVs) for military logistics and reconnaissance, raised a $100m round led by 8VC.

RADICL, an American developer of cyber defence products, raised a $31m Series A led by Paladin Capital Group.

Avalanche Energy, an American developer of compact fusion technology for defence and space, raised a $29m round led by RA Capital Management.

Refute, a British developer of counter-disinformation technology, raised a £5m seed round led by Amadeus Capital Partners.