Nvidia (NVDA) Says Anthropic Is Telling ‘Tall Tales’ About Smuggling of AI Chips

Nvidia (NVDA) has gotten into a dust-up with Anthropic over America’s policy towards foreign sales of artificial intelligence (AI) microchips and processors.

Anthropic is the AI start-up that is heavily backed by e-commerce giant Amazon (AMZN). Anthropic said in a blog post that tighter controls and enforcement are needed for exports of AI microchips to foreign nations such as China. As evidence of the need for stricter enforcement, Anthropic said that AI chips are being smuggled into China inside “prosthetic baby bumps” and “alongside live lobsters.”

Nvidia quickly responded to the smuggling claims, accusing Anthropic of exaggerating. “American firms should focus on innovation and rise to the challenge, rather than tell tall tales that large, heavy, and sensitive electronics are somehow smuggled in ‘baby bumps’ or ‘alongside live lobsters,’” said Nvidia in a statement.

The spat comes as export restrictions on U.S. microchips and semiconductors from former President Joe Biden’s term, called the “AI Diffusion Rule,” are set to take effect on May 15 of this year. The rule puts global export controls on advanced AI chips to stop rival countries such as China from gaining ground in an escalating technology race.

Anthropic, which relies on Nvidia chips and hardware to train its models, is calling for tighter restrictions that could limit Nvidia’s overseas business and revenue. “Maintaining America’s compute advantage through export controls is essential for national security and economic prosperity,” wrote Anthropic in its blog post.

In a sharply worded response, Nvidia said such policies “limit competitiveness.” NVDA stock has declined 15% this year.