With the growing concerns over Chinese investment infiltrating sensitive technology sectors in the United States, on Thursday (February 5th), US Senators formally wrote to the Department of Defense requesting a national security review of aerospace giant SpaceX. The letter alleges that Chinese investors may be acquiring shares of the rocket manufacturer through offshore entities, posing a threat to the US military and intelligence infrastructure.
According to the contents of the letter obtained by Reuters, Senators Elizabeth Warren and Andy Kim stated in their letter to Defense Secretary Pete Hegseth that Chinese-affiliated investors are using entities in the Cayman Islands and the British Virgin Islands to transfer funds in order to conceal their purchase of SpaceX shares.
Moreover, investigations by The Wall Street Journal and tech media outlet The Information have shown that such allegations stem from lawsuits over secondary market share trading, involving Chinese private equity funds evading background checks inside SpaceX through layered holding structures.
Reports indicate that SpaceX is heavily involved in US defense construction. The senators emphasized in their letter that SpaceX plays a key role in launching military and intelligence satellites and operating the Starlink communication network.
Furthermore, the senators mentioned that SpaceX’s recent acquisition of the AI company xAI in early February has raised greater urgency for the investigation. Elon Musk has publicly described the entity as a “vertical integration innovation engine” covering AI, rockets, and satellite-based internet. The senators are concerned that any level of Chinese ownership could trigger federal regulations regarding “foreign ownership, control, or influence” (FOCI).
In the letter, the senators requested a response from the Department of Defense by February 20th, which includes disclosing all known Chinese background shareholdings within SpaceX, assessing whether the company should be subject to FOCI risk mitigation requirements such as establishing an independent oversight committee, and determining whether related investments should be reviewed by the Committee on Foreign Investment in the United States (CFIUS).