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Nvidia CEO Jensen Huang has said AI model distillation — models being trained on other models' outputs — is "competition," despite the White House calling it theft. Distillation has become a key flashpoint in tensions between the U.S. and China in their race for AI supremacy. U.S. officials have accused Chinese AI companies of distillation. Treasury Secretary Scott Bessent described it as "theft" in July and threatened sanctions against overseas companies that use it to extract capability from U.S.-built models. But, when asked if distillation was "not robbery," Huang told CNBC's Squawk Box on Monday: "That's called competition." "You're allowed to test somebody else's products all you want," he said, adding that Nvidia's products are sometimes stripped "down to bones" as companies tried to learn how they worked. "I'd really prefer they didn't," he said. "I'd really prefer that nobody learns from our products, and we have the benefit of just cruising along. But, you know, frankly, competition makes everything better." "If you don't like that, if you don't like people to use your products, all you [have to do is] know your customers, and disable the service," Huang said. The White House did not immediately respond to a request for comment from CNBC. Earlier this month, the U.S.' Cybersecurity and Infrastructure Security Agency, accused China's AI companies of conducting "industrial-scale knowledge distillation campaigns" that violated U.S. companies' terms of use. Anthropic said earlier this month that it found Alibaba, which develops the Qwen family of models, and DeepSeek both engaging in "illicit distillation." China has rejected the claims.
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