Nvidia CEO Jensen Huang has referred to AI model distillation as "competition," US business news channel CNBC reported on September 28 (local time).

This statement comes despite the US White House describing the practice of distillation—"training a new model based on the outputs of another AI model"—as "theft."

AI distillation is a key issue in the global AI hegemony race between the US and China.

US officials have accused Chinese AI companies of using US AI models to cheaply distill their own.

US Treasury Secretary Scott Bessent described it as "theft" in July, threatening to sanction foreign companies that use distillation to extract capabilities from US-developed AI models.

Amid these developments, when asked on CNBC's "Squawk Box" whether distillation amounted to "robbery," Huang replied, "That's called competition."

Huang added, "You should be able to comprehensively test other people's products as much as you want," noting that for other companies to figure out how Nvidia's products work, they sometimes have to tear them down to the bone to analyze them.

Huang said, "It would be great if nobody learned from our products and we could just cruise along, but competition makes everything better."

He added, "If you don't like that, you should stop your service."

Earlier this month, the Cybersecurity and Infrastructure Security Agency (CISA) under the US Department of Homeland Security accused Chinese AI companies of violating US firms' terms of service to conduct "industrial-scale AI distillation campaigns."

Earlier this month, Anthropic claimed that China's Alibaba and DeepSeek were engaging in "unlawful distillation."