Nvidia CEO Jensen Huang Calls AI Distillation “Competition,” While U.S. Official Calls It “Theft”

Summary

Nvidia CEO Jensen Huang rejected the characterization of AI model distillation as “theft,” calling it “competition” in a CNBC interview. Distillation trains one model on the outputs of another to reproduce or extract capabilities. Treasury Secretary Scott Bessent called the practice “theft” in July and threatened sanctions against overseas companies that use it to extract capabilities from U.S.-built models. The dispute has become a flashpoint in the broader U.S.-China race over AI, with U.S. officials considering measures against companies that use distillation. Huang said companies are allowed to test other products and learn how they work, although he would prefer that competitors did not strip Nvidia products down to their core. He added that companies can disable services for customers they do not want using them. CISA earlier accused Chinese AI companies of conducting “industrial-scale knowledge distillation campaigns” that violated U.S. companies’ terms of use. Anthropic has separately accused Alibaba and DeepSeek of illicit distillation, while China has rejected the claims; the White House had not immediately responded to CNBC’s request for comment.