xAI has announced a significant reorganization of its engineering team to address competitive challenges, as revealed in a memo by SpaceX executive Michael Nicolls. The memo highlighted that xAI's training performance is "embarrassingly low," and the company is "clearly falling behind" its rivals. This restructuring involves appointing new leads for pre-training, post-training, and infrastructure modules. The reorganization is part of a broader strategy initiated by Elon Musk following SpaceX's acquisition of xAI in February 2026. The move aims to enhance xAI's competitiveness against industry leaders like OpenAI, Anthropic, and Google, amid reports of staff attrition and previous team restructuring efforts.