Howmet Aerospace Inc (HWM) News & EventsHWMHowmet Aerospace Inc

Howmet Aerospace Shares Drop Over 7% Following Musk's Statement

Howmet Aerospace (HWN) is trading lower following Elon Musk's disclosure that SpaceXplans to bring turbine blade casting in house to speed deployment of natural gas turbines for data center power. Jefferies sizes the aero and IGT engine-products market at $10B in 2025 sales and sees a likely SpaceX timeline of about four years.OWN TURBINE BLADES:In a Saturday tweet responding to an article about SpaceX laying the groundwork for manufacturing turbines to meet data center power demand, CEO Elon Musk, "SpaceX and Teslaare each building 100GW/year of solar production capacity as fast as possible, but natural gas will still be needed to supplement and bootstrap solar for several years. The limiting factor for nat gas turbine production is casting the blades & vanes. By doing in-house casting at SpaceX, we can accelerate nat gas turbines coming online by up to 18 months, which is a profound game-changer."FOUR YEARS:Commenting on Musk's confirmation that SpaceX will cast blades and vanes at its Texas foundry, Jefferies notes that details are limited at this point from a timing, capacity, and external customer perspective, though the target market is power generation. In the firm's view, the short end of potential time-to-market is likely four years, as Doncasters'has previously highlighted standing up a new facility requires up to 12 months of customer negotiations, up to 24 months to industrialize, and up to another 24 months to ramp production and improve manufacturing yields.Jefferies adds that yields should not be underestimated, noting that Howmet's Whitehall site does not even allow customer tours and all paper must be shredded. The cast engine products industry owns the process IP for casting, cooling and coating to supply critical engine parts that can survive in the most extreme operating conditions. The firm estimates the Engine Products market could reach roughly $10B in 2025 revenues, having grown at a high-teens CAGR since 2021 and including only four competitors, namely Howmet Aerospace, Precision Castparts, Consolidated Precision Products, and Doncasters.PRICE ACTION:Shares of Howmet are down over 7% at $245.60 in morning trading.