{"id":228470,"date":"2024-06-05T12:34:23","date_gmt":"2024-06-05T12:34:23","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/05\/elon-musk-admits-diverting-teslas-ai-chips-to-his-other-companies\/"},"modified":"2025-06-25T17:17:50","modified_gmt":"2025-06-25T17:17:50","slug":"elon-musk-admits-diverting-teslas-ai-chips-to-his-other-companies","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/06\/05\/elon-musk-admits-diverting-teslas-ai-chips-to-his-other-companies\/","title":{"rendered":"Elon Musk admits diverting Tesla\u2019s AI chips to his other companies"},"content":{"rendered":"

[ad_1]
\n
<\/p>\n

Elon Musk admitted diverting Nvidia\u2019s latest AI chips originally destined for Tesla<\/a> to his latest startup xAI and social media company X<\/a>.<\/p>\n

\n

Confirming a\u00a0report<\/a>\u00a0by CNBC on Tuesday, Musk explained the move by saying the chips, used for training neural networks, were better used elsewhere at the time.\u00a0<\/p>\n

\u201cTesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse,\u201d he posted.\u00a0<\/p>\n

This might not seem so controversial for a manufacturer of electric vehicles, but it comes as the CEO has gradually<\/a>\u00a0pivoted away from the goal of\u00a0growing annual car sales more than tenfold<\/a>\u00a0to the promised\u00a020 million mark<\/a>\u00a0in the face of low-cost\u00a0competition<\/a> out of China.<\/p>\n

Instead, Musk has been methodically rebranding Tesla as an AI and robotics company, pledging to invest $10 billion this year alone<\/a>\u00a0to beef up its AI training and inference compute. In April, he revealed plans to ramp up chip procurement to the equivalent of 85,000 Nvidia H100s by the end of this year just for AI training, i.e. not including inference. He had around 35,000 at the end of the first quarter.<\/p>\n

\n

Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse. <\/p>\n

The south extension of Giga Texas is almost complete. This will house 50k H100s for FSD training.<\/p>\n

\u2014 Elon Musk (@elonmusk) June 4, 2024<\/a><\/p><\/blockquote>\n

The timing of the revelation could also be damaging as Musk awaits the June 13\u00a0outcome<\/a>\u00a0of a\u00a0tense vote<\/a>\u00a0over his record pay package, dubbed the \u201clargest in human history<\/a>\u201d, whose earlier approval (in 2018) was\u00a0ruled invalid<\/a>\u00a0by a Delaware court because of governance failings. Tesla shareholders could fear they might get the short end of the stick, if Musk deems the chips are more needed at xAI, SpaceX<\/a> or X.<\/p>\n

Musk sparked fears he might breach his fiduciary responsibility to Tesla shareholders after threatening at the start of this year to further\u00a0move AI development out of Tesla<\/a> if investors didn\u2019t grant him enough stock to raise his stake from 12% to 25% (another 9% held indirectly in the form of options granted as compensation is in dispute due the Delaware ruling).<\/p>\n

These concerns were then exacerbated after his xAI startup began\u00a0hiring employees<\/a>, including from Tesla, allegedly because they were\u00a0looking to leave<\/a>\u00a0the newly branded AI and robotics company anyway.<\/p>\n

Musk\u2019s conflicting interests<\/h2>\n

On Tuesday, Musk went on to say an expansion of the EV maker\u2019s Texas site to house a new data center\u00a0is almost complete, after the CNBC report cited warnings of possible further delays to shipments of Nvidia\u2019s benchmark AI chips to Tesla.<\/p>\n

\u201cThis will house 50k H100s for FSD training,\u201d the CEO said, a number which accounts for the gap in remaining chips to be purchased this year. He then\u00a0added<\/a>: \u201cI can\u2019t overstate the difficulty of making 50k H100s train as a coherent system. No company on Earth has been able to achieve this yet.\u201d<\/p>\n

It\u2019s unclear why Tesla ordered the chips in the first place if they had no functioning data center infrastructure that could use them at the time, and Musk did not elaborate.<\/p>\n

One reason might be that Nvidia\u2019s benchmark H100 training chips\u2014so advanced the U.S.\u00a0banned their export<\/a>\u00a0to China\u2014are in such demand that he couldn\u2019t afford to take the risk of passing on a potential delivery slot allocated by\u00a0Jensen Huang\u2019s company<\/a>.<\/p>\n

In the past, however, he has complained about\u00a0not getting as many Nvidia GPU clusters as he needed<\/a>, explaining that his\u00a0planned Dojo supercomputer<\/a>\u00a0that uses custom Tesla-designed silicon was little more than a hedge against further delays.<\/p>\n

Whether diverting some of the chips away from Tesla actually hurt the carmaker in any material way is also unclear. The company claims to have invested $1 billion to more than double its compute capacity in the first quarter over the previous three months to end-December.<\/p>\n

Late in March, Musk flagged in a post that Tesla was\u00a0no longer AI training compute constrained<\/a>. This could suggest the period in which it had infrastructure capacity up and running but not enough chips to operate them is now over.\u00a0<\/p>\n

It\u2019s possible that no damage was done to the company, and given the size of Musk\u2019s economic interest it would seem logical he wouldn\u2019t want to harm his only proven profitable endeavor.\u00a0<\/p>\n

However, his admission of diverting Tesla\u2019s AI chips to his other companies highlights the fraught nature of running a publicly traded company alongside several privately-owned ones, especially when they compete for the same resources. Musk doesn\u2019t see a conflict of interest and is not shy about shifting resources as he sees fit.<\/p>\n

During Musk\u2019s pay package trial, the CEO confirmed he dispatched 50 so-called volunteer Tesla engineers to assist him at Twitter. James Murdoch, a Tesla director on both the board\u2019s audit and governance committees, was not able to provide so much as a \u2018ballpark\u2019 figure when asked about the decision, even though his testimony was provided only a few weeks later.<\/p>\n<\/div>\n