this is not entirely true, I think. secure enclaves can provide guarantee such that even the host machine cannot inspect the contents within the VM. so even though the AI model itself needs to see plaintext, all is happening in the enclave which the provider cannot see.

the main difference is where the guarantee comes from. for FHE, it comes from math, which we trust. for secure enclave, the guarantee comes from Intel/AMD's promise that their hardware is bugless/backdoorless, and that your adversary cannot directly inspect bits in the hardware