Nvidia reportedly signs another blockbuster AI supply deal, this time with Elon Musk's xAI
Musk recently said he believed power consumption for his AI5 AI processors could drop to as low as 250W . The power rating (TDP) of a chip can often be used as a decent relative proxy for the size of a chip, and by comparison, Nvidia's B200 GPUs can consume up to 1,200W, or nearly five times more power, thus implying that the AI5 will be a much smaller chip. Regardless, there absolutely isn't enough production capacity to meet Musk's targets, even if his chips are much smaller.
As one of the biggest clients of TSMC, Nvidia has supplied four million Hopper GPUs worth $100 billion (not counting China) throughout the active lifespan of the architecture, which was about two calendar years. With Blackwell, Nvidia has sold around six million GPUs, which equate to three million GPU packages, in the first four quarters of their lifespan. If Musk indeed meant 200 billion units, then he would like to get orders of magnitude more AI processors than the industry (which is largely produced by TSMC) can build in a year. Yet, if he by any chance was referring to $100 – $200 billion worth of AI processors, then TSMC and Samsung Foundry could certainly produce that volume in the coming years. However, given that Musk is not satisfied with how quickly TSMC and Samsung build fabs, it looks like he indeed thinks he needs more than these companies can supply.
"We will be using TSMC fabs in Taiwan and Arizona, Samsung fabs in Korea and Texas," said Musk. "From their standpoint, they are moving like lightning. I am just saying that, nonetheless, it would be a limiting factor for us. They're going as fast as they can, but from their standpoint, it's 'pedal to the metal.' They just never had someone, a company, with our sense of urgency. It might just be that the only way to get to scale at the rate that we want to get to scale is to build up a real big fab, or be limited in output of Optimus and self-driving cars because of AI chip [supply]."
Whether Tesla and SpaceX really need 100–200 billion chips per year remains unclear. Tesla sold 1.79 million vehicles in 2024, so it does not need more than two million chips for its cars. Of course, the company might need millions more AI processors for its AI training efforts, though we have reasonable doubts that it can indeed build AI clusters powered by billions of GPUs any time soon. Also, while anthropomorphic Optimus robots, also powered by Tesla's AI hardware, could be a big market, it will take years to develop.
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Reference reading
- https://www.tomshardware.com/tech-industry/artificial-intelligence/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/artificial-intelligence/elon-musk-wants-foundry-partners-to-build-100-200-billion-ai-chips-per-year-musk-says-chipmaking-industry-cant-deliver-on-his-goals#main
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