Elon Musk says Tesla, xAI expect to keep buying chips from Nvidia and AMD

Elon Musk said Tuesday that he expects Tesla and xAI will continue buying chips from semiconductor giants Nvidia and AMD, and possibly others.

Musk's artificial intelligence company, xAI, which now owns X (formerly Twitter) has already installed 200,000 GPUs at its Colossus facility in Memphis, the Tesla CEO told CNBC's David Faber on Tuesday. XAI is also planning a 1 million GPU facility outside of Memphis, Musk said. 

He did not specify how many chips the company had already ordered and by which date they may be installed.

"A few years ago, I made a very obvious prediction, which is that the limitation on AI will be chips," he said.

Last year, Musk directed Nvidia to send a large order of GPUs to xAI first, jumping the line ahead of Tesla.

At his autos business, Musk said Tesla's Dojo supercomputer in Buffalo, New York is already used for training its Autopilot and Optimus robotics systems.

Musk boasted on Tuesday that xAI's Colossus is the "most powerful training cluster in the world right now" with "over 200,000 GPUs training coherently." Musk's choice to build in Memphis, Tennessee, was hailed by city officials as transforming the region into a "high-tech manufacturing hub."

But local communities there have protested the power- and water-hungry operation, specifically the way that xAI has relied on natural gas-burning turbines to help power the supercomputer.

The turbines emit smog-forming nitrogen oxides (NOx), precursors to ozone formation, which have been associated with higher risk of death from respiratory disease.

As CNBC previously reported, environmental advocates say that xAI has likely "violated the Clean Air Act" and local permitting requirements for "major sources of air pollution" with its use of the turbines.