Elon Musk reportedly redirected AI chips meant for Tesla from Nvidia to X and xAI.

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Billionaire entrepreneur Elon Musk made headlines when it was reported that he redirected artificial intelligence (AI) chips originally designated for Tesla to his social media platform X and AI startup xAI. According to CNBC, Musk requested Nvidia, a leading provider of AI chips, to reroute the chips from Tesla to his other ventures.

A memo reviewed by nwoow news revealed that Musk prioritized the deployment of Nvidia’s H100 GPU cluster at X over Tesla, resulting in the redirection of 12,000 shipped H100 GPUs from Tesla to X. This decision, as outlined in the memo, led to a delay in Tesla’s receipt of over $500 million worth of processors by several months. Additionally, conflicting statements from Musk on Tesla’s AI investments and spending raised questions about the company’s financial projections and bookings.

Musk addressed the chip shipment swap in a post on X, formerly Twitter, explaining that Tesla lacked the immediate capacity to utilize Nvidia’s AI chips, which would have otherwise remained unused in storage. He reassured followers that Tesla would soon integrate the chips for training its Full-Self Driving (FSD) software at its Gigafactory in Austin, Texas. Musk emphasized the challenges of coordinating 50,000 H100s to function as a cohesive system, highlighting the complexity of AI training processes.

Despite the delay in utilizing the AI chips, Tesla remains committed to its AI investments, with plans to allocate a significant portion of its projected $10 billion expenditure on AI. Musk indicated that while internal spending would constitute about half of the total investment, Nvidia purchases would amount to approximately $3 billion to $4 billion. He underscored the importance of establishing a coherent system for AI training and expressed confidence in Tesla’s ability to overcome technical hurdles.

The report of Musk’s involvement in redirecting AI chip shipments comes amidst scrutiny over his leadership at Tesla, particularly in light of his diverse commitments to other ventures like X and xAI. Musk’s apprehensions about investing heavily in AI at Tesla without a significant control over the company’s shares have been previously expressed. He voiced concerns about building products outside of Tesla unless he had substantial voting control, underscoring the importance of strategic decision-making and governance in his business endeavors.

Tesla shareholders are slated to vote on the reinstatement of Musk’s $56 billion pay package, which was invalidated by a Delaware court earlier this year. The compensation package, considered the largest among CEOs of publicly-traded U.S. companies, has sparked debates about executive compensation and corporate governance.

In conclusion, Elon Musk’s involvement in redirecting AI chip shipments intended for Tesla underscores the complexities of managing multiple ventures and navigating strategic priorities. As Tesla continues to navigate challenges and opportunities in the AI landscape, Musk’s leadership decisions will undoubtedly remain under scrutiny, shaping the trajectory of both Tesla and his other ventures in the AI space.

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