Hey
@preston @HODL
Listened to the Mastermind pod yesterday and on the subject of AI, really needed to send the following through. You can also read through my other Notes here for greater clarity.
China isn’t just winning the AI war, its also increasingly likely that the war is already over. As a quick aside, too, China is doing to robotics what it did to EVs.
Anyway, back to AI. It’s been six months since DeepSeek hit the world straight in the face. In that time – just six months! – there has been a rapid, iterative process of competitive Chinese model after model. Ten days ago, all the talk was on Kimi K2 and just yesterday Qwen announced a new model that has the LLM community in palpable shock.
All open-source models . All applying lessons learned from competitors to aggressively iterate and improve.
But that’s not the most significant achievement. All these models were able to hit their operational aims while hamstrung by compute. Unlike the closed American models that just piss away CAPX at Nvidia and AMD for chips, the Chinese required a work around. Brute force innovation combined with other very Chinese tactics solved the issue. And this was all achieved before the H20 was approved for sale into China once again.
And what is it that litters the business media headlines? A war for talent where Zuch and Altman are going to the mattresses. Meta and OpenAI are the current day equivalent of America Online and Yahoo. Walled gardens run by leaders who don’t even know that the competition is at the gates and set to take over. This is akin to Mehmed the Conqueror taking Constantinople and ending the thousand-year reign of Rome.
I know that America is fiscally boxed in, but it is quite worrisome that there remains this fixation on American AI models and a fervent belief that the likes of OpenAI or xAI will dominate the stack. Christ, just last week Altman called an audible to announced that their open-source alternative would be postponed indefinitely. That is going backwards.
None of this should be construed as “praise of China”. I am a red-blooded American who just so happens to live in Shanghai. This is all just a slow motion train crash. Moreover, those commenting on China Shock 2.0 have neither the true understanding of just how impactful it will be AND the speed at which it is playing out. Shock 1.0 was a slow burn. Shock 2.0 will make the Palisade fires look like a backyard cook out.
