Pentagon Chief Technology Officer Emil Michael on Thursday ruled out negotiations with Anthropic after the agency labelled the AI lab a supply-chain risk in a dispute over restrictions on how the U.S. military can use its technology.

"There's no chance. The (Anthropic) leadership has proven, through the leaking and through a sort of bad faith negotiation, that they don't want to reach an agreement," Michael said in an interview with CNBC.

Anthropic did not immediately respond to a Reuters request for comment.

Last week, the US Department of Defence labelled Anthropic a supply-chain risk, a move that effectively bans its technology from military use and bars government contractors from deploying it in work for the U.S. armed forces.

Anthropic sued the Trump administration on Monday, calling the government's actions unlawful, and said the move will put hundreds of millions of dollars worth of revenue in jeopardy.

The dispute is notable in part because Anthropic aggressively courted the U.S. national security apparatus before most other AI companies.

CEO Dario Amodei has said he is not opposed to AI-driven weapons, but believes the current generation of AI technology isn't good enough to be accurate.

Reuters has reported that Anthropic's investors were racing to contain the damage caused by the fallout with the Pentagon. A group, including OpenAI and some of these investors, expressed concern over the government's move.