Data Sheet—The Real Big Story From Teslas Earnings

By
Aaron Pressman

and Adam Lashinsky

8:50 AM EDT

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

 

I think it’s probably time to let the cat out of the bag because the cat’s going to come out of the bag anyway.”—Elon Musk, August 2, 2018

Overlooked in all the hoopla last week around Elon Musk’s apology, astronaut flights announced for his SpaceX business, and Tesla’s improving rates of production was a little news about silicon. Tesla has been relying on chips from Nvidia to power its autopilot and self-driving car features, specifically Nvidia’s PX2 platform. But last week, Musk “let the cat out of the bag” about the carmaker’s own chip efforts. Nvidia is out, to be replaced in all Teslas with a chip developed internally. “I’m a big fan of Nvidia, they do great stuff,” Musk noted before giving them the axe.

There are several angles of interest. It almost seems like there is a small group of genius chip designers who travel the world making the magic happen at one company after another. For one, take the press-shy silicon architect Jim Keller. Keller helped design AMD’s hit Athlon processor in the 1990s, went to Apple to build the A4 and A5 chips for iPhones and iPads, and then returned to AMD to work on the Ryzen CPU before joining Tesla in 2016. Lately, he’s hopscotched to Intel. Keller doesn’t talk to reporters much. (I got no response to my entreaties last year when I was writing about AMD.) But he did give an interview to the chip-focused news site Anandtech last month. “I kind of work and focus more on the next really interesting problem,” Keller explained.

Another really interesting problem may be what this development portends for the future revenues of chipmakers like Nvidia, Intel, and AMD that are counting on the nascent self-driving car market to demand a lot of their top-end, most expensive products. Musk said Tesla’s home grown solution was 10 times faster than Nvidia’s at the same cost. Nvidia, though, has announced its own next-gen chip for autonomous driving called Pegasus, also with 10 times better performance. Perhaps there are other advantages to Tesla’s chips as well, such as lower cost or energy consumption. In any event, Wall Street shrugged off the news and Nvidia shares were unchanged last week (and are still up 30% this year).

Finally, I think this move adds another commonality on the Steve Jobs-Elon Musk nexus. Jobs famously wanted command over all the key ingredients of Apple’s products. “I’ve always wanted to own and control the primary technology in everything we do,” he explained back 2004. Seems like Musk may be following that advice.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

2 thoughts on “Data Sheet—The Real Big Story From Teslas Earnings

  1. Thanks for any other informative website. The place else may I am
    getting that kind of information written in such a perfect way?
    I have a project that I’m simply now operating on, and I’ve been at the glance out for such info.

Leave a comment.

Your email address will not be published. Required fields are marked*