SpaceX plans to lay off 10 percent of its more than 6,000 employees, a source familiar with the decision said on Friday.
"To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," the California-based company, headed by Elon Musk, said in a statement to AFP.
"Either of these developments, even when attempted separately, have bankrupted other organizations," it added.
"This means we must part ways with some talented and hardworking members of our team."
It added that the trim down was "only due to the extraordinarily difficult challenges ahead."
Citing an email sent to employees on Friday, the Los Angeles Times said the company was offering those affected a minimum of eight weeks' pay and other benefits, including career coaching and resume assistance.
The announcement came as SpaceX on Friday launched a Falcon 9 rocket from Vandenberg Air Force Base in California carrying 10 communications satellites.
Founded by Musk, SpaceX makes most of its money from multibillion dollar contracts with NASA and satellite launches.
SpaceX in November won authorization from US officials to put nearly 12,000 satellites into orbit in order to boost cheap, wireless internet access by the 2020s.
And The Wall Street Journal reported last month that the company was raising $500 million from investors to help launch its satellite internet service.
Serial entrepreneur Musk has risen to prominence with a series of ambitious ventures, especially Tesla, which has boosted production of its Model 3 electric car and has continued to enjoy strong demand for the vehicle.
Other Musk ventures include OpenAI, Neuralink and the Boring Company, which focuses on infrastructure and tunnels.
But Musk has also drawn plenty of criticism over unconventional and at times erratic behavior -- after admitting last year that he has struggled with exhaustion.
In an interview broadcast last month, Musk openly mocked the US Securities and Exchange Commission after agreeing to a $20 million fine to settle fraud charges the agency had brought over Musk's quickly aborted effort to take Tesla private.
And in September, he raised eyebrows with an appearance on a podcast with comedian Joe Rogan, which saw him sip whiskey and smoke weed while musing at length about artificial intelligence, colonizing space, and the need to give love a chance.
Later that month, he was sued by a British caver who had helped rescue 12 boys trapped in Thailand after Musk called him a "pedo guy" and a "child rapist."