Tesla and Musk's AI company XAI will seek out chips from world chipmakers like Nvidia and AMD for future chips. If possible, they might also buy chips from other companies. Musk claims the limits he sees in developing AI technology would be a huge obstacle to its development in the next couple of years.
XAI is an AI company owned by Musk on Musk's social media platform X. Tesla recently announced that it has placed 200,000 graphics processing units (GPUs) in its 'Colossus' factory located near Memphis, Tennessee. This is significant for XAI's high-performance computing system since it uses such powerful GPUs to train and build artificial intelligence. Musk mentioned that plans are underway for a massive new factory outside Memphis with a capacity of 1 million GPUs.
But according to CNBC's report, Musk refused to identify explicitly how many chips they have already placed orders for and when they will implement them. However, since chip demand for chips utilized in AI is extremely high, Musk has already predicted that the supply of chips would be the predominant constraint for AI development. In fact, he purchased a massive XAI last year from Nvidia so that they could get their chips earlier than Tesla.
Furthermore, Tesla's 'Dozo' supercomputer is located in Buffalo, New York, to train Tesla's 'Autopilot' and 'Optimus Robotics' systems. Colossus of XAI is now the world's most powerful training cluster, where training operations are being performed with more than 200,000 GPUs in parallel.
The decision to set up a new supercomputer in Memphis has been received with open arms by the city government as a hi-tech manufacturing center. However, there are some concerns in the minds of the common public, mainly due to the consumption of excess power and water. XAI is fueling its supercomputers with natural gas turbines, which emit poisonous gases into the environment and become a health hazard to a bigger extent of respiratory diseases.
According to Musk, after the chip shortage problem, power shortages could be a big problem in the near future. According to him, power shortages could affect other AI companies by 2026.
In addition to this, XAI and Tesla are reportedly working together. In its recent financial report, Tesla reported that XAI spent approximately $191 million in 2024 in buying their 'megapack' system and will spend $36.8 million by February 2025.
Simultaneously, regarding the possibility of Tesla merging with XAI, Musk explained that he is not looking into it as of yet, but it is 'not impossible'. He further added that it would take the support of the Tesla shareholders.
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