Elon Musk, chief executive officer of SpaceX and Tesla and owner of X, speaks at the Milken Conference 2024 on May 6, 2024 in Beverly Hills, California.

David Swanson | Reuters

Elon Musk says they can grow. Tesla In “a leader in AI and robotics,” an ambition he says will require a lot of expensive processors. Nvidia To build its infrastructure.

On Tesla’s first-quarter earnings call in April, Musk said the electric vehicle company would increase the number of active H100s — Nvidia’s flagship artificial intelligence chip — from 35,000 to 85,000 by the end of this year. they also wrote A few days later in a post on X that Tesla will “spend $10 billion in joint training and predictive AI this year.”

But emails written by senior Nvidia staff and widely shared within the company show that Musk presented an exaggerated picture of the Tesla purchase to shareholders. Correspondence from Nvidia staff also reveals that Musk diverted a large batch of AI processors earmarked for Tesla to his social media company X, formerly known as Twitter.

Tesla shares fell as much as 1 percent on the news Tuesday morning.

By ordering Nvidia to move the privately held X ahead of Tesla, Musk pushed back by months the automaker’s receipt of more than $500 million in graphics processing units, or GPUs, that could potentially lead to supercomputers. The delay in setting up will increase, Tesla says it needs to. Developing autonomous vehicles and humanoid robots.

“Elon is redirecting the 12k shipped H100 GPUs actually to Tesla instead of X by prioritizing X H100 GPU cluster deployment over X vs Tesla,” said a December Nvidia memo. “In return, the original X orders of 12k H100 will be shipped to Tesla for January and June.”

An updated Nvidia email from late April said Musk’s comments on Tesla’s first-quarter call “conflicted with bookings” and that his April post on X was about $10 billion in AI spending. Also “contradicts bookings and fiscal year 2025 forecasts.” The email cited news of Tesla’s ongoing, drastic layoffs and warned that headcount reductions could cause further delays with the “H100 project” at Tesla’s Texas Gigafactory.

New information from the emails, read by CNBC, highlights a growing conflict between Musk and some angry Tesla shareholders who question whether the billionaire CEO is fulfilling his responsibilities to Tesla. while also running a collection of other companies that require his attention, resources and heavy lifting. Amount of capital

An Nvidia spokesperson declined to comment for this story. Representatives for Musk and X and Tesla did not respond to requests for comment.

Critics have said that Musk is. Just a part-time CEO Tesla, the company responsible for the vast majority of its wealth. Musk is also CEO of aerospace company SpaceX, founder of brain-computer interface startup Neuralink and tunneling venture The Boring Co. He also owns X, which he acquired in late 2022 for $44 billion, when it was still called Twitter. He launched his AI startup xAI in 2023.

X and xAI are strongly correlated. In a ___ Post on X in November.“X Corp investors will own 25% of xAI,” Musk wrote. Additionally, XAI uses some of the capacity in X data centers to run some of its training and estimation for the large language models behind its chatbot Growk, CNBC has learned.

Musk has described Grok, whose real name is TruthGPT, as a politically incorrect chatbot “a rebel chain” and a competitor to OpenAI’s ChatGPT and other generative AI services.

While Musk touts many of his projects, Tesla shareholders have cause for concern. The company has been suffering from a troubling decline in sales due to a growing lineup of electric vehicles and increased competition. His reputation has also been damaged in America. According to Axios Harris Poll 100 Surveywhich attributed some of the slippage to Musk’s “antics” and “political satire.”

Tesla’s stock price dropped 29% this year.

Instead of discussing EV sales or a massive restructuring at Tesla, Musk is encouraging investors to focus on future products he’s been promising for years but has yet to deliver. . This includes AI software to turn existing cars into self-driving vehicles, specialized robotics that can earn money for their owners, and a network of driverless transportation.

“If someone doesn’t believe Tesla is going to solve autonomy, I think they shouldn’t be an investor in the company,” Musk said on an April earnings call. “We will, and we are.”

To get there, he said, Tesla needs plenty of Nvidia’s GPUs that are specialized for AI training and workloads. Those chips are in limited supply due to increased demand from Google, Amazon, Meta, MicrosoftOpenAI and others.

‘Using every GPU that’s out there’

Nvidia, now the world’s third-most valuable company with a market cap of $2.8 trillion, has said it is struggling to keep up with demand. Between cloud service providers and companies developing AI models, customers are “using every GPU that’s out there,” Nvidia CEO Jensen Huang said on an earnings call in May, after the chipmaker Reported its third straight quarter of revenue growth of more than 200%.

Huang also said on an earnings call in February that Nvidia “does its best to allocate fairly and avoid unnecessary allocation” and added that “when the data center is not ready, some Why should it be allocated?”

In naming customers already using Nvidia’s next-generation Blackwell platform, Huang mentioned xAI on a May call with six of the biggest tech companies on the planet, as well as Tesla.

Jensen Huang, co-founder and chief executive officer of Nvidia Corporation, speaks during the Nvidia GPU Technology Conference on March 19, 2024 in San Jose, California.

David Paul Morris | Bloomberg | Getty Images

Musk likes to tout his infrastructure spending at both companies.

At Tesla, Musk has promised to build one. $500 million In the “Dojo” supercomputer Buffalo, New Yorkand a “super-dense, water-cooled supercomputer cluster” at the company’s factory. Austin, Texas. The technology will likely help Tesla develop computer vision and the LLM needed for robots and autonomous vehicles.

At xAI, which is competing with OpenAI, Anthropic, Google and others to develop generative AI products, Musk is looking to build the “world’s largest GPU cluster” in North Dakota, which in June Some capacity is online, according to an insider. Nvidia email from Feb.

The memo mentions a “Musk mandate” to make all 100,000 chips available to xAI by the end of 2024. noted that the LLM behind xAI’s Grok was relying on Amazon and Oracle Cloud infrastructure provides additional data center capacity with X.

the information Previously reported some details of xAI’s data center ambitions.

On May 26, xAI said it closed one. $6 billion financing round Led by the same investors who funded Musk’s Twitter takeover. The company was incorporated in March 2023, but Tesla did not disclose its composition at the time, and it was four months before Musk publicly introduced the startup.

Conflict of interest

While Musk has said for years that Tesla is a leader in AI, he wrote in a Post on x in January that he wanted more control of the company before moving further in that direction.

“I’m eager to see Tesla become a leader in AI and robotics without ~25% voting control. Enough to be influential, but not so much that I can’t be swayed,” he said in the post.

Tesla’s latest Proxy Filing indicates that Musk owns 20.5% of the company’s outstanding shares, a figure that includes options granted to Musk as part of his unprecedented 2018 CEO pay package. A Delaware court has ordered that the compensation be revoked. Post-trial proceedings are ongoing and subject to appeal.

If he is unable to reach his desired ownership mark, Musk said in a January post, he would “prefer to build products outside of Tesla.” He is already doing it on xAI.

Musk’s comments in the January post rankled some longtime bulls, including the company’s largest retail shareholder, Liu Kuoguan, and Gerber Kawasaki’s Ross Gerber, who called his demand “black mail.”

Joel Fleming, a securities attorney at Equity Litigation Group, said that by allowing his private companies to go ahead of Tesla on critical hardware purchases, Musk is easily revealing his conflicts of interest.

“When you have someone like Mr. Musk who is loyal to multiple companies, the law recognizes that creates a conflict,” Fleming said. “If you owe duties to two or more companies that are competing on the same things, you can shift corporate opportunities from one company to another.”

Fleming, who often represents public company investors in shareholder disputes, said that in such situations, other executives would be in the best position to make decisions, while those who are conflicted should refrain. .

“Historically this is not the path that Mr. Musk has chosen for himself,” Fleming said.

Musk isn’t shy about pooling corporate resources between his companies.

For example, after buying Twitter, Musk hired dozens of Autopilot software engineers and other technical and management employees at Tesla to help make drastic changes at the company. Some employees even work for two Musk companies at the same time.

At xAI, Musk has also attracted employees away from Tesla, including machine learning scientist Ethan Knight, and at least four other former Tesla employees who worked on Autopilot and big data projects there before joining the startup. were

A former Tesla supply chain analyst, who spoke on condition of anonymity to discuss sensitive matters, told CNBC that Musk has always viewed his companies as an extension of his personality and believes He can do whatever he wants with them. This includes Tesla’s 2016 acquisition of SolarCity, where he was chairman and a top shareholder.

However, given Nvidia’s lack of technology, redirecting a large batch of chips from Tesla to the X is an extreme move, the person said. The decision means the automaker freed up valuable time that could have been used to build its supercomputer cluster in Texas or New York and advance the models behind its self-driving software and robotics. .

Watch: Nvidia is one such company.

FirstMark's Rick Heitzman says Nvidia is a 'one-to-one company'.





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