Elon Musk Redirects NVIDIA AI Chips Reserved for Tesla to xAI


In a bold strategic move, Elon Musk has directed NVIDIA to allocate AI chips initially reserved for Tesla to his AI startup, xAI. This decision highlights Musk’s commitment to accelerating advancements in artificial intelligence through his new venture.

On June 4, 2024, it was revealed that Musk instructed NVIDIA to prioritize shipments of H100 AI chips for xAI over Tesla. This move underscores the high demand for these advanced GPUs, which are essential for training and running complex AI models.

Musk’s decision aligns with his broader vision of developing powerful AI systems, potentially at the expense of Tesla’s immediate AI needs​.

xAI, founded by Musk in July 2023, aims to rival established AI entities like OpenAI and Google. The startup recently raised $6 billion in Series B funding, pushing its valuation to $24 billion. This funding is intended to support the development of xAI's ambitious projects, including the creation of a supercomputer dubbed the "Gigafactory of Compute"​.

The supercomputer, expected to be operational by fall 2025, will utilize around 100,000 NVIDIA H100 chips. These chips are pivotal for the Grok AI models that xAI is developing. By reallocating these resources, Musk aims to position xAI at the forefront of AI innovation, potentially creating the most powerful AI supercomputer to date​.

This decision has sparked discussions among Tesla shareholders and industry analysts. Some shareholders have called for Tesla to secure a stake in xAI, given the intertwined nature of Musk's enterprises. Musk has indicated plans to discuss this potential investment with Tesla's board, highlighting the strategic integration of his various ventures​.

The reallocation of NVIDIA chips also reflects the intense competition for AI resources. Companies like Microsoft and Meta are already in line for these chips, underscoring the high stakes involved in acquiring cutting-edge AI technology. Despite the shift in chip allocation, Tesla continues to leverage NVIDIA’s technology for its AI-driven advancements, including autonomous driving systems.

Overall, Musk's maneuver illustrates his dedication to advancing AI capabilities through xAI, even if it means diverting critical resources from Tesla. This move is set to have significant implications for the AI landscape, as xAI strives to build a supercomputer capable of groundbreaking AI research and applications.


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