Inside the US chip export control fight: Nvidia vs Anthropic, and what China does next

The fight over US chip export controls is no longer just Washington versus Beijing. It runs straight through the American AI industry. Nvidia, the chipmaker that supplies most of the world's AI accelerators, and Anthropic, the Amazon-backed AI lab that buys those chips, have taken opposite sides in public, according to CNBC's report on 1 May 2025.

The immediate trigger was the "AI Diffusion Rule," a set of global export controls on advanced AI chips and model weights introduced under former President Joe Biden. It was set to take effect on 15 May 2025. The rule aimed to stop rival nations, China above all, from closing the gap in an AI arms race that both governments now treat as strategic. President Donald Trump was reportedly working on updating the restrictions, which added uncertainty on top of an already contested policy.

Baby bumps and lobsters

Anthropic argued for tighter controls in a blog post published on 30 April 2025. The company said Chinese smuggling tactics included chips hidden in "prosthetic baby bumps" and "packed alongside live lobsters." It cited the 2022 arrest of a woman carrying chips into China and the 2023 seizure of "computer display cards" in a lobster shipment in Hong Kong. Anthropic also proposed lowering the export threshold for so-called Tier 2 countries, tightening rules to cut smuggling risk and increasing funding for enforcement.

"Maintaining America's compute advantage through export controls is essential for national security and economic prosperity," Anthropic wrote.

Nvidia did not let that pass. A company spokesperson called the claims "tall tales" and argued that American firms should focus on innovation rather than telling stories about large, heavy and sensitive electronics being smuggled in baby bumps or alongside live lobsters. The same spokesperson said China, with half of the world's AI researchers, has highly capable AI experts at every layer of the AI stack, and that America "cannot manipulate regulators to capture victory in AI."

Anthropic stood by its submission, saying it supported "strong and balanced export controls" that secure America's lead in infrastructure development and ensure that the values of freedom and democracy shape AI. The awkward part is commercial. Anthropic relies heavily on Nvidia hardware to train its models, and tighter restrictions could limit Nvidia's overseas business and revenue from chip sales.

Huang's verdict: a failure

By 21 May 2025, Nvidia CEO Jensen Huang had sharpened the argument. Speaking at the Computex tech forum in Taipei, he told reporters that US chip export controls had been a "failure" because they spurred Chinese developers instead of stopping them. According to The Guardian, Huang said local Chinese companies were "very, very talented and very determined," and that the controls gave them "the spirit, the energy and the government support to accelerate their development."

Huang put numbers on the damage. He said Nvidia had written off billions of dollars in sales, and that its share of China's AI chip market had fallen from almost 95 percent at the start of the Biden administration to 50 percent. He repeated a figure he has used before: China has 50 percent of the world's AI researchers. The same week, Beijing accused Washington of "abusing export controls to suppress and contain China," calling new US warnings to other countries "typical unilateral bullying and protectionism."

The timeline matters here. Huang's Taipei remarks came after further US restrictions banned shipments to China of Nvidia's H20 datacentre GPUs, a lower-powered chip designed specifically to comply with Biden-era rules. The US government said the new rules addressed the risk that Nvidia products might be "used in, or diverted to, a supercomputer in China." Huang had visited Beijing in mid-April 2025, meeting Chinese trade officials and, according to the Financial Times, DeepSeek founder Liang Wenfeng.

China builds its own, controls or not

The longer arc of the policy is messier than either side of the Nvidia-Anthropic argument suggests. Congressional investigators found that US and allied companies sold $38 billion worth of semiconductor tools in 2024 alone, according to The Register's report on a House Select Committee on the Chinese Communist Party review published in October 2025. Most of those sales were older equipment either exempt from US export rules or sold to unregulated parties, meaning the vendors were acting in compliance.

That is precisely the committee's complaint. Investigators said current policy blocks sales to specific companies such as China's Semiconductor Manufacturing International Co., but does little to stop state-backed firms not on the US entities list from acquiring hardware. The report singled out ASML's continued sales of deep ultraviolet lithography systems to China. DUV is older technology, used until recently to produce chips down to around 7nm, but it remains in high demand in China because export controls keep the newest extreme ultraviolet tools out.

The committee wants a more comprehensive ban on chipmaking equipment sales to Chinese interests, and says allies that fail to align should have their equipment made subject to the Foreign Direct Product Rule, which lets US export law reach foreign-made goods produced with US technology or software.

The reverse blockade

Then the picture flipped. Chinese customs officials blocked shipments of Nvidia's H200 processors from entering China, according to a Financial Times report cited by The Guardian. Nvidia had expected more than one million orders from Chinese clients, and its suppliers had been working around the clock to prepare shipments as early as March. Parts suppliers put production on hold.

The H200 is Nvidia's second most powerful AI chip, and Washington had cleared it for export to China. Under the arrangement, the US-designed, Taiwanese-manufactured chips would first go to a US laboratory for testing, allowing a 25 percent tariff to be imposed as they passed through the country. The same tariff was applied to AMD's MI325X processor.

Chinese authorities did not give reasons, and sources told Reuters it was unclear whether this was a formal ban, a temporary measure or a bargaining tactic. Government officials reportedly summoned domestic tech firms to warn them against buying the chips unless necessary. So a policy designed in Washington to slow China's AI progress ended up with Beijing blocking American chips that Washington had approved for sale.

What the whole sequence shows is that export controls are now a two-way instrument. Washington can restrict what Nvidia sells abroad. Beijing can restrict what China buys. And companies like Nvidia, Anthropic and DeepSeek are making billion-dollar decisions about chip design and supply chains while the rules keep moving under them.