Musk Asks Nvidia to Prioritize Chips Shipments to X, xAI Over Tesla

Elon Musk, CEO of Tesla Inc. (NASDAQ: TSLA) as well as X and xAI, requested Nvidia give priority to processor shipments to X and xAI rather than Tesla, which has baffled many in the tech industry. An internal memo seen by media outlets revealed that the businessman and investor plans to grow Tesla to become a trailblazer in artificial intelligence and robotics, which will require plenty of expensive processors to establish its infrastructure.

Tesla was expected to receive more than $500 million worth of chips from Nvidia. The internal memo with a December date said that the X H100 GPU cluster use at X instead of Tesla was done by rechanneling 12,000 of delivered H100 GPUs that were originally ordered for Tesla. These chips were meant for the development of AI and robotics.

The news is proving the speculation that has been going around that the tech mogul prioritizes AI development over Tesla. Some of Tesla’s shareholders have questioned Musk’s commitment to the EV company. This is because of the number of other companies Musk is running alongside the automotive and energy companies. Shareholder concern is that Musk is prioritizing his other ventures at the expense of Tesla.

However, neither Musk nor Nvidia has responded fully to these developments. Musk, on his X handle, shared that there wasn’t space where the chips could be sent to be turned on, and they would have just remained within the warehouse. He also added that since the south addition to Giga Texas is nearly complete, it can accommodate the 50,000 H100s for training FSD.

With the redirection of these chips, the shipment to Tesla will have to be delayed by several months. This major setback will hinder the company’s efforts to set up relevant infrastructure to develop full self-driving (FSD) software and robotics initiatives. Furthermore, it will affect Tesla’s ability to invest in AI research and development, thus delaying its progress in the arena.

Tesla is facing growing competition and regular hurdles in the EV market. The delayed chip shipment will worsen these challenges, potentially impacting the company’s competitive edge. With other big companies, such as Waymomo and Crui already steps ahead of the competition with significant progress under their belts, particularly in autonomous-driving technology, Tesla’s delay could put it at a major disadvantage.

However, on Tesla’s Q1 earnings call in April, Musk said the company plans to significantly increase the number of H100s, Nvidia’s Flagship AI chip, to 85,000 from 35,000 by the end of 2024.

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