Elon Musk Diverts NVIDIA AI Chips from Tesla to X and xAI, Sparking Concerns

Elon Musk, CEO of Tesla, has redirected thousands of NVIDIA AI semiconductor chips initially intended for Tesla to his other ventures, X and xAI. This move has raised questions about Tesla's procurement plans and its commitment to developing artificial intelligence (AI) technology.

According to an internal NVIDIA memo from December, Musk diverted 12,000 NVIDIA H100 graphics processing units (GPUs) originally meant for Tesla to X and xAI. This decision delays Tesla's receipt of over $500 million in processors by months, potentially impacting the company's AI technology development.

Musk explained on X that Tesla had no place to store and turn on the NVIDIA processors. He mentioned that the expansion of Tesla's Giga factory in Texas was almost complete and would house 50,000 H100s for full self-driving (FSD) training. He also suggested that NVIDIA would not be able to track all of Tesla's AI expenditures, as about half of them would be internal.

Why this matters: Elon Musk's decision to divert NVIDIA AI chips from Tesla to his other ventures raises concerns about the company's commitment to developing artificial intelligence technology, which has significant implications for the future of the electric vehicle industry. This move could impact Tesla's ability to stay ahead in the AI and robotics space, potentially affecting its market share and competitiveness.

Despite these developments, Musk expects Tesla to spend around $10 billion on AI this year. This includes the procurement of sensors for all of its cars and the development of self-driving technology. However, the redirection of NVIDIA chips has caused some NVIDIA staff to express doubts about Tesla's bookings with the chipmaker.

Musk's decision to prioritize shipments to X and xAI over Tesla comes ahead of a pivotal shareholder vote on his pay package at Tesla. Some Tesla shareholders are concerned that Musk is not fully committed to the automaker while simultaneously running his other companies.

Tesla's stock has been affected by these developments, erasing gains in early trading and falling as much as 1.3%. The stock has dropped about 30% this year, reflecting the market's concerns about Tesla's focus and future prospects.

Musk's multiple ventures, including SpaceX, Neuralink, and The Boring Co., along with his recent acquisition of X and the launch of xAI, have raised questions about his ability to manage and prioritize his commitments effectively. Critics argue that Musk is only a part-time CEO of Tesla, the company responsible for the majority of his wealth.

As Tesla battles a slowdown in the electric vehicle market and deals with layoffs of more than 10% globally, the diversion of NVIDIA chips to other ventures further complicates its efforts to stay ahead in the AI and robotics space, potentially affecting its market share and competitiveness.

Elon Musk's decision to redirect NVIDIA AI chips from Tesla to X and xAI has sparked concerns about Tesla's AI technology development and raised questions about his commitment to the automaker. The impact on Tesla's stock and the upcoming shareholder vote on Musk's pay package will be closely watched.

Key Takeaways

• Elon Musk diverted 12,000 NVIDIA AI chips from Tesla to X and xAI.
• The move delays Tesla's receipt of $500 million in processors by months.
• Musk claims Tesla had no space to store and use the chips.
• The decision raises concerns about Tesla's AI development and commitment.
• Tesla's stock fell 1.3% due to the news, amid concerns about Musk's priorities.