Nvidia denies ‘tall tales’ that chips are being smuggled in fake baby bumps and alongside live lobsters

Nvidia and AI firm Anthropic are currently embroiled in a back-and-forth around claims the former’s chips are being smuggled into China, and the concerns that smuggling raises. Where Anthropic cites a systemic problem, Nvidia argues Anthropic is telling “tall tales”.

In a recent blog post, Anthropic warned of the ‘major threat’ that is chip smuggling. It claims China has “established sophisticated smuggling operations, with documented cases involving hundreds of millions of dollars worth of chips”. This leads Anthropic to argue that export enforcement needs increased funding, and that the tier system introduced in the ‘AI Diffusion Rule‘ needs adjusting to allow tier 2 countries better access to technology, alongside more lenient rules for tier 2 countries.

Effectively, the AI Diffusion Rule, which takes effect on May 15, would prioritise allies of America for the control of advanced AI chips, and any chips being smuggled into China would subvert the aims of that rule.

For some context on those specific methods for smuggling, a woman was caught after smuggling 200 CPUs in a prosthetic belly back in 2022. Then, in 2023, two men were found smuggling GPUs into China alongside live lobsters. These aren’t just random claims on behalf of Anthropic, it’s citing previous cases of smuggling.

Nvidia, however, told CNBC, “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”.

Given the antagonism between America and China regarding advancement in AI (as shown by the likes of DeepSeek), Anthropic, as an American AI company, has an investment in America being the dominant leader in AI growth. As cited at the bottom of Anthropic’s blog post, Anthropic’s leaders have previously argued America’s “shared security, prosperity and freedoms hang in the balance”, in regards to wider AI support and adoption.

On the way to a recent White House event Jen-Hsun Huang has spoken about the need to “accelerate the diffusion of American AI technology around the world.” That’s Nvidia’s CEO arguing for getting more ‘American’ AI chips out into different territories, which could kinda be on the same side of the argument as Anthropic. Especially as he also later stated that: “China is right behind us,” which is also seemingly leaning into that whole secure nationhood stuff, too.

This is one step in a large argument made by companies concerning their competition with China. Just a few months ago, OpenAI argued it should be allowed to scrape copyrighted content as it would lose out to China otherwise.

Anthropic, like many other major AI companies, is reliant on the hardware of Nvidia to operate in wider AI workloads. The examples it brings up are from chip smugglers in the last few years, but it doesn’t argue that these specific examples are how smugglers are beating detection right now. In this sense, Anthropic is broadly gesturing at a perceived problem with smuggling to justify tightening restrictions and enforcement in light of the Diffusion Rule.

Nvidia is hand-waving that concern with its response, but the incredulity in the messaging does seem a tad strange, given these were previously successful smuggling techniques, albeit not specifically of Nvidia products. Anthropic has not given any evidence of any relevant or ongoing smuggling techniques as of the time of writing.