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Elon Musk redirects AI chips from Tesla to xAI and X Corp

Elon Musk confirmed he diverted artificial intelligence chips away from Tesla Inc. to his X Corp. and xAI Corp. ventures, offering explanations both for the redirected shipment and internal Nvidia Corp. emails casting doubt on the carmaker’s procurement plans.

In a series of posts Tuesday on X, Musk wrote that Tesla had no place to put Nvidia chips where they could be turned on. CNBC reported earlier that the billionaire redirected 12,000 of the chipmaker’s H100 graphics processing units originally slated for Tesla to X instead, citing an Nvidia memo from December.

In another email CNBC viewed from late April, Nvidia staff said Musk made statements during the automaker’s first-quarter earnings call and on X that conflicted with the company’s bookings with the chipmaker.

The Tesla chief executive officer said during the April 23 earnings call that roughly 35,000 of the company’s H100s were active, and he expected the electric-vehicle maker to have around 85,000 working by year-end. On April 28, he wrote on X that Tesla will spend around $10 billion this year on AI.

Musk suggested in one of his posts Tuesday that Nvidia wouldn’t be able to track all the money Tesla is spending on AI this year, writing that about half of its expenditures will be internal. The company is working on its own supercomputer as part of broader efforts to develop self-driving technology. It also procures sensors for all of its cars, regardless of whether consumers pay extra for its more advanced driver-assistance system.

“My current best guess for Nvidia purchases by Tesla are $3B to $4B this year,” Musk wrote.

Following CNBC’s report, Tesla shares erased gains in early trading and fell as much as 1.3% after the open. The stock has dropped about 30% this year.

Musk’s plans for developing AI within Tesla have come under greater scrutiny since he threatened in January to take that work elsewhere unless he’s awarded around 25% voting control of the EV maker. Weeks after making that demand, a Delaware court voided the compensation package that would have awarded him tens of billions of dollars worth of stock options and boosted his stake in the carmaker. Tesla shareholders will vote on the pay deal again at its June 13 annual meeting.

Musk ordered up Tesla’s biggest-ever layoffs earlier this year and is staking its future on self-driving vehicle development. While the idea of offering an autonomous taxi service has been kicking around the company for at least eight years, Tesla has yet to stand up much of the infrastructure it would need, nor has it secured regulatory approval to test robotaxis on public roads.

The billionaire acquired X, the company formerly known as Twitter, for $44 billion in late 2022 and founded xAI the following year. The two companies are closely linked, with Musk having said late last year that investors in X will own 25% of xAI. The latter company announced last month that it had raised $6 billion. NDTV Profit

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