China Is Building Opensource AI in a Box
China could very well hollow out U.S. AI industry economics
Chinese labs are building opensource models that are approximately 6 months behind the frontier.
The models are largely built on Huawei silicon with HPM from Samsung and SK. Therefore, if these models gain significant traction to where they command even 25-30% of LLM revenue (up from 10% today), one can see how quickly China could hollow out model economics.
This would hit the frontier model vendors, the hyperscalers, the neoclouds and the silicon layer - yes even NVDA and MU - nothing is immune to a low-priced Chinese stack.
My view is if Trump bans Chinese models and infra, multinationals will simply acquire China’s stack in the EU.
Frontier token costs need to come way down. The only way that happens is with Government subsidies as we can’t magically make compute capacity appear. I fear the Govt. subsidy brand of Socialism is coming.
Taxpayers subsidize healthcare, retirement, pubic schools, the DoD/FBI/CIA, foreign aid and wars to name a few. Next will be subsidizing LLM tokens, which means the Dollar will get weaker, so the tokens won’t actually get cheaper in real terms.