Trump's AI Czar David Sacks Dismisses AI Chip Smuggling Fears, Warns Over-Regulation Could Hand AI Dominance To China: 'We Talk About These Chips Like They Could Be Smuggled In The Back Of A Briefcase'

On Tuesday, David Sacks, the White House AI czar, downplayed concerns over AI chip smuggling, arguing that over-regulating U.S. AI exports could stifle innovation and allow China to gain a technological edge.

What Happened: Speaking at the AWS summit in Washington, Sacks dismissed the idea that U.S. AI chips could be easily smuggled, noting that the chips are massive, weighing up to two tons and cannot be hidden, reported Reuters.

“We talk about these chips like they could be smuggled in the back of a briefcase. That’s not what they look like. These are server racks that are eight feet tall and weigh two tons,” he said.

Sacks, a key figure in the President Donald Trump administration’s AI policy, expressed concern that overly restrictive regulations could impede U.S. technological progress.

He argued that tightening controls might inadvertently push global markets toward China.

“I do worry we're on a trajectory where fear could overtake opportunity and we end up sort of crippling this wonderful progress that we're seeing,” Sacks warned.

Why It's Important: The comments come as U.S.-China relations remain tense, particularly over AI technology.

Sacks criticized the export restrictions on AI chips imposed during the former President Joe Biden era, which sought to prevent them from reaching China, fearing their use in military applications.

He stated that such measures could backfire, pushing countries into China's arms.

“We rescinded that Biden diffusion rule, which…made diffusion a bad word. Diffusion of our technology should be a good word, he said, highlighting the need for global cooperation on AI.

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Last month, it was reported that the U.S. plans to implement a regulation aimed at confirming the origin of AI chips developed by Nvidia Corp NVDA and its competitors, to stop them from being illicitly transported to China.

During the same time, Nvidia criticized AI startup Anthropic, backed by Amazon.com, Inc. AMZN and Alphabet Inc.'s GOOG GOOGL Google, for advocating stricter U.S. export controls on AI chips to China.

The clash followed a blog post by Anthropic stating that chips had been smuggled into China using methods like hiding them in "prosthetic baby bumps" and with "live lobsters."

In response, a Nvidia spokesperson dismissed these allegations as exaggerated, urging U.S. companies to prioritize innovation over what they called "tall tales."

Previously, Nvidia CEO Jensen Huang also reportedly warned U.S. lawmakers that existing restrictions on AI chip exports might be inadvertently boosting Huawei Technologies' position in the global competition for AI leadership.

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