Jensen Huang says AI distillation is 'competition.'

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."