Musk diverts Nvidia chips from Tesla to X Corp amid logistical hurdles

Logistical issues led Elon Musk to redirect numerous Nvidia chips, initially intended for Tesla’s electric vehicles, to X Corp. On Tuesday, Musk explained that Tesla had nowhere to send the Nvidia chips, so they would have just remained in storage.

That’s a response to a CNBC report highlighting a memo from Nvidia stating that 12,000 of its top AI chips, originally meant for Tesla, were sent to X instead. Future shipments intended for X were later reassigned to Tesla.

Musk also announced that the Gigafactory in Texas is nearly complete and will house 50,000 H100 chips. He mentioned that about half of Tesla’s $10 billion AI-related spending this year will be for internal use, including the AI inference computer and Dojo supercomputer. He noted that Nvidia hardware accounts for two-thirds of the cost of building AI training superclusters, and Tesla plans to spend $3-4 billion on Nvidia hardware this year. Tesla is working on its own supercomputer to advance driverless-car technology, aiming to increase the number of active H100s from 35,000 to 85,000 by year-end.

Why does it matter?

The following situation has sparked criticism that Musk’s focus on AI and robotics might detract from Tesla’s core car business. Musk, who currently holds 13% of shares directly and about 21% with options, has requested 25% ownership to increase his influence. In January, he threatened to take his advanced technology ideas elsewhere if he isn’t granted more ownership.