Nvidia is currently engaged in a dispute with AI company Anthropic over accusations that their chips are being illegally smuggled into China through unusual methods. Anthropic claims that there are organized smuggling operations involved, which could threaten the enforcement of the AI Diffusion Rule set to take effect soon.

In a recent blog post, Anthropic described chip smuggling as a significant threat, alleging that China has sophisticated operations in place, involving large sums of money in surveillance. They argue that enforcement of export laws should be bolstered, particularly concerning their new AI Diffusion Rule set for mid-May.

Contrarily, Nvidia has labeled these tales as exaggerated, stating that American companies should be focusing on innovation instead of fabricating outlandish claims about how technology could be smuggled in absurd ways.

For context, there have been real incidents involving smuggling attempts, including cases where CPUs were hidden in prosthetic bellies and GPUs found alongside live lobsters. However, Nvidia maintains that such claims do not relate to its products and imply that Anthropic’s assertions lack credibility regarding current smuggling tactics.

In addition to countering Anthropic’s arguments, Nvidia’s CEO has previously emphasized the need to ramp up American AI technology availability globally, remarking that “China is right behind us” in technological advancement. This ongoing clash reflects the broader competition between American and Chinese interests in the AI sector.