Elon Musk Ordered Nvidia To Redirect Thousands Of AI Chips: Report

Elon Musk has just ordered Nvidia to prioritize the shipment of AI chips to X and xAI instead of Tesla, as revealed by emails that circulated within Nvidia and copies of which were obtained by CNBC.

Musk has claimed that he will be able to make Tesla into an AI and robotics leader, and that this will require thousands of processors from NVIDIA in order to build the required infrastructure.

During the first quarter earnings call of Tesla in April, Musk said that the EV company will be increasing their active H100s from 35,000 to 85,000 by the end of the year. The H100s are Nvidia's AI chips, and the tech mogul previously said that he would be spending $10 billion on the AI aspect of the EV company.

However, emails written by Nvidia's senior staff and widely shared within the company implied that Musk simply presented a bloated picture to shareholders, making them believe that there would be an actual procurement of thousands of Nvidia chips.

This was not the case, though, since the Nvidia emails showed that Musk had redirected a huge number of the AI processors, which were supposedly for Tesla, to X.

Because of what Musk did, where he allowed X to receive their chips ahead of Tesla, now faces the spectacle of delays, considering that the redirected chips were more than $500 million worth of GPUs.

"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 memo from Nvidia in December said.

"In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla," it noted.

An April email from Nvidia showed that Musk's comments on the first-quarter Tesla call "conflicted with bookings." In addition, his April post on X, which was talking about $10 billion in AI spending, also "conflicted with bookings."

According to CNBC, the new information found in the emails underscored the conflicts between Musk and other Tesla shareholders, who question whether Musk fulfills his obligations as CEO while also taking care of other companies.

CNBC tried to reach Nvidia for a comment, but it declined. Neither Musk, X, nor a representative from Tesla responded to requests for a comment.

The cause of concern for Tesla shareholders is justified, considering that there has been a decline in sales. The Axios Harris Poll 100 Survey showed that Tesla's reputation also suffered, and part of it was attributed to Musk's rants.

For this year, Tesla's stock price has dipped by 29%.