Elon Musk’s AI startup plans to build multibillion-dollar supercomputer in Memphis

Elon Musk’s artificial intelligence startup xAI is planning to build a multibillion dollar supercomputer in Memphis as part of his effort to step up competition with rival firms such as OpenAI and Google, according to a report.

Musk and his team at xAI have been in talks with officials in Memphis since March about construction of a facility that would house a data center that he hoped would be up and running by the fall of next year, according to Bloomberg News.

The planned supercomputer would contain 100,000 of Nvidia’s H100 graphics processing units (GPU). It would be used to train the latest version of xAI’s chat bot Grok.

Currently, xAI rents around 16,000 Nvidia H100 GPUs from Oracle Cloud. News of Musk’s plan for a supercomputer were first reported by The Information.

The H100 is a chip manufactured by Nvidia.

It is considered the most powerful GPU chip on the market and is designed specifically for AI applications.

Ted Townsend, president of the Greater Memphis Chamber, told Bloomberg News that the planned supercomputer would be “the largest multibillion-dollar investments in the city of Memphis’s history.”

Townsend did not say how many jobs the project will create nor did he speculate on the total cost, though he did add that the city was offering xAI tax breaks and other incentives to build the project in Memphis.

“We have work to do, make no mistake,” he said.

“But we’re really incredibly grateful for the interest from Elon and his executives and the xAI team.”

News of Musk’s plans for Memphis was first reported by Daily Memphian. The Post has sought comment from X.

Memphis Mayor Paul Young declined to get into specifics of what the xAI supercomputer would cost and how many jobs it would generate — only to say that details were “still in development.”

“We like to say that innovation is in our DNA — from the birth of the modern-day hotel, grocery store, and overnight delivery to groundbreaking medical discoveries, the blues and rock ‘n’ roll,” Young said in a statement shared with Bloomberg.

“We are a city of innovators, and it makes sense that Memphis feels like home to those seeking to change the world.”

Tennessee has become a popular destination for businesses looking to offer employees lower cost of living expenses while saving on taxes.

Oracle, which is chaired by Musk’s friend Larry Ellison, said earlier this year it was planning to move its corporate headquarters from Austin, Texas, to Nashville.

The move would come just a few years after Ellison relocated Oracle headquarters from Silicon Valley to the capital of the Lone Star State.

Amazon also has an office in Nashville where thousands of employees work.

Earlier this week, CNBC reported that Musk has told Nvidia to prioritize shipments of AI processors to his companies X and xAI over his electric-vehicle maker Tesla.

“Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12K of shipped H100 GPUs originally slated for Tesla to X instead,” an internal Nvidia memo from December showed, according to the CNBC report.

The news signals Musk is giving precedence to artificial intelligence-related development outside Tesla and comes ahead of a crucial shareholder vote on his $56 billion pay package at the company.

The billionaire is also pursuing AI development at X, and xAI, for chatbot Grok, among other applications.

XAI, which Musk launched in 2023 to challenge ChatGPT-creator OpenAI, raised $6 billion in funding last month.

Tesla shareholders will vote on June 13 on a pay package for Musk that is considered to be the largest for a CEO in corporate America.