Elon Musk Told Nvidia to Ship AI Chips Reserved for Tesla to X

Lora Kolodny, reporting for CNBC:

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

But emails written by Nvidia senior staff and widely shared inside the company suggest that Musk presented an exaggerated picture of Tesla’s procurement to shareholders. Correspondence from Nvidia staffers also indicates that Musk diverted a sizable shipment of AI processors that had been reserved for Tesla to his social media company X, formerly known as Twitter. [...]

By ordering Nvidia to let privately held X jump the line ahead of Tesla, Musk pushed back the automaker’s receipt of more than $500 million in graphics processing units, or GPUs, by months, likely adding to delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and humanoid robots.

The argument against one person being the CEO of multiple companies is generally about distraction/attention — that each CEO gig demands all of one’s available time. But here’s a case where two of Musk’s companies are in direct conflict with each other. Musk seemingly treats all of his companies as subsidiaries of his own personal fiefdom conglomerate, but they aren’t. And unlike X Corp, Tesla Motors is publicly traded.

Matt Levine, in his Money Stuff column:

The extremely obvious answer is that you should not be the CEO and controlling shareholder of two different companies that compete for the same inputs! There is not a good answer! You can’t, like, put this problem into the Good Governance Machine and have it come out clean. The problem is that you have a fiduciary obligation to the shareholders of one company to put their interests first, and you have a fiduciary obligation to the shareholders of the other company to put their interests first, and you cannot do both. This is why one person is not usually the CEO of two different companies that compete with each other, and, when someone is, people get mad at him all the time.

I can’t recall a situation like this when, say, Jack Dorsey was CEO of Twitter and Square, or, going back further, when Steve Jobs was CEO of Apple and Pixar. In those cases it was more like an athlete who played two different sports, like Bo Jackson or Deion Sanders. Fans of one of their teams might argue that they could do even better in that one sport by concentrating on it year-round, but you couldn’t argue that the Kansas City Royals were competing against the Oakland Raiders. With Musk and AI, it’s like he’s playing on several competing teams within the same league.