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Musk Allegedly Shifts Nvidia Chips from Tesla to X

ByHuey Yee Ong

Jun 6, 2024

Musk Allegedly Shifts Nvidia Chips from Tesla to X

Elon Musk is ambitious about turning Tesla into a leader in AI and robotics, a vision that demands significant investment in Nvidia’s high-cost processors to enhance its infrastructure.

During Tesla’s first-quarter earnings call in April, Musk announced plans to boost the number of active Nvidia H100 AI chips from 35,000 to 85,000 by the end of the year. Shortly after, he posted on X that Tesla would spend $10 billion this year on “combined training and inference AI.”

However, emails from Nvidia senior staff, widely circulated within the company, reveal that Musk may have overstated Tesla’s procurement plans to shareholders. The emails indicate that Musk diverted a substantial shipment of AI processors reserved for Tesla to his social media company, X, formerly Twitter.

Following this news, Tesla shares fell by as much as 1% on Tuesday morning.

By prioritizing X over Tesla, Musk delayed Tesla’s receipt of over $500 million worth of GPUs, potentially causing setbacks in developing the supercomputers needed for autonomous vehicles and humanoid robots.

A December Nvidia memo stated, “Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead. In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.”

An April Nvidia email noted that Musk’s statements on the first-quarter Tesla call “conflict with bookings” and that his X post about $10 billion in AI spending also “conflicts with bookings and FY 2025 forecasts.” The email also mentioned ongoing layoffs at Tesla and warned of potential further delays in the “H100 project” at Tesla’s Texas Gigafactory.

These revelations highlight growing tensions between Musk and concerned Tesla shareholders, who question whether he can adequately manage Tesla while also running several other companies demanding his attention and resources.

Nvidia declined to comment on the matter, and Musk, along with representatives from X and Tesla, did not respond to requests for comment.

Critics argue that Musk acts as a part-time CEO for Tesla, the company that generates most of his wealth. He also serves as CEO of SpaceX, founder of Neuralink and The Boring Co., and owner of X, which he acquired for $44 billion in late 2022. In 2023, he launched his AI startup, xAI.

X and xAI are closely connected. Musk disclosed in a November post on X that “X Corp investors will own 25% of xAI.” Additionally, xAI uses some of X’s data center capacity to run its large language model training and inference for its chatbot Grok, which CNBC reports.

Musk introduced Grok, initially called Truth GPT, as a politically incorrect chatbot with “a rebellious streak,” aiming to compete with OpenAI’s ChatGPT and other generative AI services.

As Musk juggles multiple ventures, Tesla shareholders have valid concerns. The company is experiencing a decline in sales due to an aging electric vehicle lineup and increased competition. Its reputation has also taken a hit in the U.S., as indicated by the Axios Harris Poll 100 survey, which attributes part of this decline to Musk’s “antics” and “political rants.”

Tesla’s stock price has dropped 29% this year.

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Featured Image courtesy of Apu Gomes/Getty Images

Huey Yee Ong

Hello, from one tech geek to another. Not your beloved TechCrunch writer, but a writer with an avid interest in the fast-paced tech scenes and all the latest tech mojo. I bring with me a unique take towards tech with a honed applied psychology perspective to make tech news digestible. In other words, I deliver tech news that is easy to read.

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