Yahoo Finance

Chipmaker Nvidia claims Amazon backed AI startup Anthropic is telling tall tales about international chip smuggling as the two companies clash ahead of a rule that would curb US chip exports. Here with more, we've got Yahoo Finance Tech Editor, Dan Howley. Dan, just take us into this. What's, what's dividing Nvidia and Anthropic here?

Yeah, it's, uh, kind of a statement that Anthropic came out with, uh, earlier to, uh, yesterday, actually. Uh, it's about the AI diffusion rule that the US is kind of mulling right now. It was a piece of, uh, legislation or, or a move that the Biden administration had put into place, not necessarily legislation, but, uh, it's part of a Department of Commerce framework. Uh, and so what it does is it essentially sets up three different buckets of countries and then allocates, uh, whether or not they need certain licenses to buy AI chips or, uh, limits the number that they can buy each year. Now, uh, the kind of idea is that this is going to, at least from Nvidia's side, limit the amount of chips that they can sell. Uh, and Nvidia says, uh, as well as Microsoft says that it would hurt US competitiveness around the world in the AI space. Anthropic is taking the other stance. They're kind of in favor of the move here to ensure, uh, as they say it, basically cementing US AI supremacy at this point, uh, and keeping China kind of back behind the US. And so this is this, this kind of back and forth that you're seeing, and it's interesting, uh, because, you know, Amazon backs Anthropic, Amazon, big Nvidia customer, but Amazon also produces its own chips. Uh, Amazon obviously is going to continue to offer Nvidia chips. Uh, so it's, it's, it's an interesting dynamic here that we're seeing with, you know, a, uh, uh, kind of back and forth. And so the, uh, the actual kind of, uh, comment of the tall tale, uh, is, uh, uh, from Nvidia saying that Anthropic claiming that chip smuggling into China can take the form of people using prosthetic baby bumps, uh, and packaging GPUs alongside live lobsters. So, in a comment to CNBC, uh, Nvidia basically said that's not what's happening. Uh, they said it's tall tales and that the idea of moving sensitive chips inside, uh, containers with live lobsters doesn't really make sense. So, I mean, look, it is worth noting that some analysts have said that the amount of money that Nvidia makes out of China, not directly from China, but through chip movement, uh, is a lot higher than, uh, the actual Chinese revenue that shows up on the, uh, the earnings report. So, I mean, it is something that that's come up before. Uh, you know, again, these are analysts speaking, not Nvidia, uh, and they say that, uh, in their own reports that anything that goes into Singapore specifically doesn't necessarily stay with Singapore, doesn't go to China, but goes around the world to different areas. So, you know, as far as Nvidia is concerned, there's, there's no real issues with with, you know, chip smuggling in in China.

Yeah, the old-fashioned, those aren't lobsters, those are semiconductors. Uh, the US also weighing removing Nvidia chip curbs on the UAE. What do we know about that so far?

Yes, so as part of the AI diffusion rule, there's, there's those tiers. And so there's the first tier, uh, which are certain US allies. There's a second tier, uh, which, uh, some US allies find themselves in, uh, and then there's a third tier, which is basically, you know, an arms embargo essentially. Uh, so if you wouldn't sell a missile to a country, you're not going to sell them, uh, or let them buy GPUs. It's the middle that the UAE finds itself in. And so, uh, the, uh, kind of conversation here is, uh, between President Trump and the UAE and whether or not, uh, they'll be able to get a leeway as far as the AI diffusion act, whether or not they'll have, uh, kind of a bilateral agreement with the US where they'll be able to get access to these chips. And I think that's really the, the kind of conversations going on here. One of the concerns that's been raised about the AI diffusion rules, uh, and a kind of suggested, uh, uh, move where the US would talk to individual countries about getting AI chips is that Nvidia's chips or other AI companies, but it's Nvidia would then be used as a bargaining chip in, uh, the overall tariff conversation. That's been an ongoing fear, uh, for quite a while about, uh, Nvidia and their AI chips and what they're capable of. So this is kind of again just leading into these discussions about where Nvidia stands in these conversations and how long this is going to continue to drag on. Uh, you know, Nvidia reports at the end of the month, uh, now we're in May. Uh, and so we'll see how they perform, but you know, obviously any easier way for them to get chips to customers is a huge boon for them.