Posted by akrylov 1 day ago
It's like people forget the entire point, perhaps even definition of technology is "doing more with less."
The "brute force" of power and cycles is almost certainly the least important thing, perhaps even a hinderance.
We've invented a new term here too: revenue backlog. OpenAI and Anthropic in particular need to recover probably at least $2 trillion to recoup their capex investments. Now Claude code has had an impact on software engineering but for a lot of AI uses you're just not going to recover $2T on $20/month subscriptions. It reminds me of Twitter trying to dig itself out of a $44B hole and losing half their ad revenue with $8/month blue ticks.
The only commercial product AI sells is labor displacement and the resulting wage suppression. You lay off 10-20% of your staff and nobody is asking for raises. The people left are happyt o still have jobs (and thus a house). They'll work even harder doing unpaid labor of the displaced workers to keep those jobs. That's what OpenAI and Anthropic are selling.
The problem is that if these companies get their way, 10-20% of the population is going to be out-of-work and society is going to fall apart. Data centers are going to be the targets of increased societal desperation and anger as this gets worse.
There was a report this week that roughly 50% of singles in the US aren't dating because they can't afford to [1]. This goes well beyond the well-understood problems of not being able to afford a house let alone start a family. This is a birth rate death spiral in the making.
So, back to OpenAI and Anthropic, the only way they justify their valuations and can make up the "revenue backlog" is if they have a moat. And I don't think that's going to happen. Hardware will get cheaper. Nobody is talking about how the generation of AI hardware will write of trillions in investments for some reason. I don't know why.
But the dark horse here is China. DeepSeek when it was first released (early last year?) was a shot across the bow. We have it and toher models (eg Qwen) that will close the gap with whatever OpenAI and Anthropic produce such that no company will "own" AI in the way that OpenAI and Anthropic need to. In the coming years, China's chipmaking is rapidly closing the EUV gap and Western companies have zero penetration into this market. China doesn't want to be dependent on foreign tech that can be withheld at any moment.
Don't believe me? Just listen to the NVidia CEO say the exact same thing [2][3]. Huang realizes this is such a problem that he's gone on Air Force One to this week's Trump summit in China to try and convince the Chinese to buy NVidia chips.
[1]: https://parade.com/living/nearly-50-of-single-americans-not-...
Poor people with nothing date when they want to. If people have interest in having partners, they can date and socialize for free.
It’s all about adoption and the bigger picture. The US is an untrustworthy, isolated island in the AI future if you vote another idiot into office in a few years. If you’ll still be able to vote at all, that is.
The largest part of the world is not the US. The cutting-edge US models are way too expensive for most parts of the world, and that also shows in adoption.
China is building an ecosystem of open-source models that are both cheap and good enough for most use cases. While most of the US AI sphere will collapse under the pressure of making profits, which means having their models and infrastructure adopted by as many enterprises and individuals across the world, China’s models will have become global standards and hard to displace.
If Beijing’s AI pitch centers on universal access and cost-effectiveness, then Chinese AI firms do not need the latest chips to win the global AI race. They also don’t need the expensive US-run infrastructure. If you watch Chinese AI adoption closely, they already want as many Chinese people as possible to be able to build and try with AI, whereas for most Americans, US models for productive use are already too expensive.
Kimi K2.6 sits within touching distance of Opus 4.7 and GPT-5.5 while costing about $4 per mil output tokens. That is six to eight times cheaper than cutting-edge US models. If you run hundreds of agents, that’s a significant opportunity to get the same work done for a lot less.
Even early adopters like Singapore, ditching US models, the government kicked Zuckerberg in the nuts and went for Qwen instead to build its sovereign AI models.
To understand why the US is at a severe disadvantage in this race, you need to understand China’s Belt and Road Initiative (BRI). BRI entails Chinese firms delivering fully financed infrastructure projects in a bid to lock third countries into China’s economic orbit. They use the same approach for their open source ai models, but this time the infrastructure is both invisible and free.
No need to build power plants or buy /build ports. AI dependency is invisible to both policymakers and the population, limiting pushback. No pesky activists in Germany nagging about China buying parts of ports. No African nutbags questioning why the humble Xi is building hospitals in areas Chinese mining companies take things out of the ground for pennies on the dollar.
China is going for a marathon here while the US tries to push their ai tech by sheer force into the throats of the world. As soon as Chinese ai models have become global standards, it’s game over for us ai companies. And China is way better at this game than the US. They have proven this over and over again in the past 50 years.
I recommend reading the China Standards 2035 strategy to get a better understanding of their approach and how smart this is.
https://www.china-briefing.com/news/china-standards-2035-str...
AI is not as revolutionary as you think in terms of our experiences with previous technological advances in terms of trade and economics.
Western economies are locked into U.S. models, while China runs on Chinese ones. It’s the age-old game. But the real war of the AI race will be fought in the global south.
I will give you three examples.
Can you really imagine, if you look at what AI needs to cost to make a profit, that even at the current prices, US models and infrastructure, which are heavily subsidised already, being used in cost-sensitive countries? I am not talking about coders, think really big here for a second.
Secondly, US ai models are trained on Western data. How do you expect them to grasp local contexts in the Southern Hemisphere? Chinese open-source models, on the other hand, can be downloaded and finetuned with country-specific data.
Want an example? Check out AfriqueQwen-14B, which is adapted to the top twenty African languages.
So I think this author is wrong. The ai race to be won is not hardware or cloud infrastructure, my money is on it will be a contest to decide which models and standards become the default infrastructure in countries that are up for grabs.
China neither needs the best models nor does it need the best cloud infrastructure, it just, like so often, only needs to be affordable and good enough to become the default choice in emerging markets.
The right choice would be for everyone to step off the gas pedal and think about whether we are willing to become China in order to beat China. Our ancestors worked really hard to get us here, our rights, our ways of life, culture, all the blood, sweat, and tears.
AI better be worth it in the long run for all of humanity if we go back to survival of the fittest. Because that is what it will take to beat China at their game.
I think deep down, sama knows this and that's why he's pushing for "Universal Basic Compute", which really means forcing every US citizen to become an OpenAI subscriber.
Stopped reading here. What a ridiculous statement and I can only assume the rest of your post is just as ridiculous.
And that's not to mention the warping of US economic life by the concentration of capital around this bizarre endeavor, with the circular multi-hundred-billion-dollar deals and such.
Unfortunately, the detrimental effects of global warming arrive gradually, and are spread out over the entire globe, so the "AI barons"/tech magnates will probably suffer the least, while island countries will be completely wiped out, whole regions will become too hot to sustainabily live in, tens of not hundreds of millions will have to migrate, biological diversity will suffer, etc. They will look back on these times in a 100 years and will think of us, or at least of US, as the people boarding the Titanic. Hopefully not as the people who board the Hindenburg.