Elon Musk said Tuesday he expects Tesla and XAI to continue buying chips from semiconductor giants Nvidia and AMDmaybe even someone else.

Musk's artificial intelligence company XAI now owns the social media platform X, which has installed 200,000 GPUs in its Colossus facility in Memphis, Tennessee, Tesla The CEO told CNBC's David Faber on Tuesday. Musk said XAI also plans to have 1 million GPU facilities outside Memphis.

He did not specify how many chips the company had ordered and the date it could be installed.

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

Last year, Musk instructed NVIDIA to send a large number of GPUs to Xai first and jump off the line in front of Tesla.

Musk said in his automotive business that Tesla's Dojo supercomputer is based in Buffalo, New York, has been used to train its autopilot and Optimus Prime robotics systems. At Xai, Musk boasted on Tuesday that the Colossus is "the most powerful training cluster in the world right now" and "training related to over 200,000 GPUs."

Musk's choice to build in Memphis was praised by city officials to transform the area into a "high-tech manufacturing center."

But local communities there protested about power-consuming and thirsty water, especially the way XAI relies on gas-burning turbines to help supercomputers power. The turbine emits nitrogen oxides formed by smoke, precursors formed by ozone, and is associated with a higher risk of death from respiratory diseases.

As CNBC previously reported, environmental advocates said XAI may “violate the Clean Air Act and local licenses requirements for “primary sources of air pollution”, using turbines.

Musk said he sees chips as a major factor limiting today's AI development, but predicts that this will become "electrical devices" and will soon arrive at AI companies by mid-2026.

Musk says China's investment in power generation currently exceeds that of the United States However, he added that the United States still has the "advantage of breakthrough innovation".

"I think it's a cultural thing, that's to question the breakthrough innovation of authority," Musk said. "Basically speaking, when you do breakthrough innovation, you're questioning traditional wisdom." In China, people don't like to "question authority."

Faber asked Musk, Xai and Tesla if it might be possible to merge, a concept that was sometimes proposed by Musk fans that viewed their company’s portfolio as part of “Muskonomy” rather than independent entities that are obliged to different investors.

Musk said that this is not something he is currently considering, but "it's not an impossible issue" and "apparently it needs the support of Tesla shareholders."

Tesla and Xai have already started their business together.

The electric car maker recently revealed in a financial filing that XAI will spend about $191 million in 2024 and spent $36.8 million on Tesla Megapacks, a utility-scale storage system, by February 2025.

watch: Elon Musk interviewed by CNBC