Elon Musk’s xAI Declines New Oracle Chips

Elon Musk’s AI startup xAI and technology company Oracle failed to reach a compromise during negotiations to expand a $10 billion server lease agreement, according to The Information.

Discussions were halted due to disagreements over timelines and power supply issues, media reports indicate. The existing chip lease agreement with Oracle remains in effect.

Elon Musk stated that his company is using Nvidia H100 graphics processors to independently develop an AI training system, which is set to launch this month.

xAI contracted for 24k H100s from Oracle and Grok 2 trained on those. Grok 2 is going through finetuning and bug fixes. Probably ready to release next month.

xAI is building the 100k H100 system itself for fastest time to completion. Aiming to begin training later this month.…

— Elon Musk (@elonmusk) July 9, 2024

“The reason we decided to build [the 100,000-processor] H100 and the next major development is that our fundamental competitiveness depends on how much faster we are than any other AI company. It’s the only way to catch up,” commented the billionaire.

Musk noted that xAI’s Grok 2 model is trained on 24,000 Nvidia H100 chips provided by Oracle and is likely to be ready for release “next month.”

According to media reports, in May the entrepreneur announced plans to create a supercomputer with at least 100,000 chips by autumn 2025 for training and launching a new version of Grok.

Back in April, xAI secured $6 billion in funding with a preliminary valuation of $18 billion.

In the same month, the company unveiled an updated version of the Grok chatbot.