Report: Musk Redirected AI Chips Bound for Tesla

Move raises more concerns about conflicts of interest ahead of shareholder vote
By Rob Quinn,  Newser Staff
Posted Jun 5, 2024 1:15 PM CDT
Report: Musk Redirected AI Chips From Tesla to X
Musk arrives at the 10th World Water Forum in Nusa Dua, Bali, Indonesia last month.   (AP Photo/Firdia Lisnawati, File)

Tesla investors are preparing to vote on a pay package for Elon Musk worth around $56 billion, and a report on his handling of Nvidia chips may add to concerns about his commitment to the company. According to emails seen by CNBC, the Tesla CEO told the chipmaker to redirect a large shipment of chips designed for artificial intelligence to his social media company, X, and his closely linked AI startup, xAI, instead of Tesla.

  • The emails. "Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead," a Nvidia email said in December. "In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla." Other emails noted that Musk's public comments about increasing the number of chips used at Tesla "conflict with bookings."

  • Why it matters. Nvidia chips are in high demand, and Musk has said he plans to stock up on them to make Tesla "a leader in AI and robotics," the Verge reports. A former Tesla supply chain analyst tells CNBC that the redirection is an extreme move that could delay the advancement of Tesla's self-driving models.
  • Conflicts of interest. An advisory firm that suggested Tesla investors should vote against the pay package next week cited Musk's "extraordinarily time-consuming projects" outside Tesla. Securities litigator Joel Fleming tells CNBC that the chip issue speaks to Musk's conflicts of interest. "If you owe fiduciary duties to two or more companies that are competing over the same things, you may end up channeling corporate opportunity away from one company to another," he says.
  • Musk says there was no place for them. "Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse," Musk said in a post on X. He added that an extension of the Giga Texas factory is almost complete, and it will "house 50k H100s."
(More Elon Musk stories.)

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