Elon Musk ordered Nvidia to ship thousands of AI chips reserved for Tesla to X and xAI

🌈 Abstract

The article discusses the conflict between Elon Musk's priorities for his various companies, particularly Tesla and his new AI startup xAI, and how this is impacting Tesla's access to critical Nvidia AI processors. It highlights how Musk has diverted a large shipment of Nvidia's H100 chips from Tesla to his social media company X, formerly Twitter, causing delays for Tesla's development of autonomous vehicles and robotics. The article also explores the potential conflicts of interest and corporate governance issues arising from Musk's leadership of multiple companies that compete for the same resources.

🙋 Q&A

[01] Elon Musk's Prioritization of X and xAI over Tesla

1. What evidence is provided that Elon Musk prioritized shipments of Nvidia processors to X and xAI ahead of Tesla?

• Emails circulated inside Nvidia show that Musk told the chipmaker to prioritize shipments of processors to X and xAI ahead of Tesla.
• An Nvidia memo from December said "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 more recent Nvidia email from late April said Musk's comments on Tesla's Q1 call "conflicts with bookings" and his post about $10 billion in AI spending "conflicts with bookings and FY 2025 forecasts."

2. How did this impact Tesla's access to critical Nvidia AI processors?

• By ordering Nvidia to let X jump the line ahead of Tesla, Musk delayed the automaker's receipt of over $500 million in processors by months.
• This likely added to delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and humanoid robots.

3. What was Musk's justification for diverting the Nvidia chips from Tesla to X?

• In a post on X following the publication of the article, Musk said "Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in the warehouse." He said the "south extension" of the Texas Gigafactory will soon "house 50k H100s" for training of self-driving technology.

[02] Conflicts of Interest and Corporate Governance Issues

1. What concerns have been raised about Musk's conflicts of interest in managing multiple companies?

• Critics have said Musk is only a part-time CEO of Tesla, while also running SpaceX, Neuralink, The Boring Co., and now X and xAI.
• By letting his private companies like X and xAI skip ahead of Tesla in procuring critical Nvidia hardware, Musk is making his conflicts of interest readily apparent.
• A securities litigator said the law recognizes this creates conflicts when someone like Musk owes fiduciary duties to multiple competing companies.

2. How has Musk intermingled corporate resources between his companies?

• Following the Twitter buyout, Musk enlisted dozens of Autopilot engineers and other Tesla employees to help with changes at Twitter.
• At xAI, Musk has attracted employees away from Tesla, including machine-learning scientists and others involved in Autopilot and big data projects.
• A former Tesla supply chain analyst said Musk has always considered his companies as an extension of his persona and believed he can do whatever he wants with them.

3. What are the potential implications of Musk's actions for Tesla shareholders?

• Tesla shareholders have reason for concern as the company faces a troubling sales decline and its reputation has suffered.
• Rather than discuss these issues, Musk has been encouraging investors to focus on future products that he has promised for years but not yet delivered.
• The redirection of critical Nvidia chips from Tesla to X means the automaker gave up precious time that could have been used to advance its self-driving and robotics efforts.