Speaker 1: AI Daily Briefing imed sharp thanks for joining me today
Speaker 1: the K three shock. While US chip dominance no longer
Speaker 1: guarantees AI lead moonshot AI just dropped a model that's
Speaker 1: rattling markets, rewriting timelines, and forcing a hard question. If
Speaker 1: China can match US frontier AI at half the price,
Speaker 1: what exactly are the chip export controls protecting Kimmi. K
Speaker 1: three landed on July seventeenth. It's a two point eight
Speaker 1: trillion parameter model from a three year old Chinese startup,
Speaker 1: and early rankings put it competitive with or a head
Speaker 1: of clawed Opus and GPT five point six Soul. The
Speaker 1: price gap is the sharper signal. K three runs at
Speaker 1: fifteen dollars per million tokens. It's US competitors charge fifty.
Speaker 1: Markets didn't wait for independent verification. TSMC fell seven percent,
Speaker 1: Soft Bank dropped nine, Invidiouslid one point two percent, Meta
Speaker 1: two point four The Nasdaq one hundred was down one
Speaker 1: percent on the day. That's a significant repricing for a
Speaker 1: single model announcement from a company most Western investors hadn't
Speaker 1: heard of forty eight hours earlier. The important distinction is
Speaker 1: that this wasn't paddic about one model. It was a
Speaker 1: repricing of the underlying assumption that US chip dominance translates
Speaker 1: reliably into AI capability. Dominance. K three puts that logic
Speaker 1: under serious pressure. The more consequential move comes later. On
Speaker 1: July twenty seventh, Kimmi K three becomes the world's first
Speaker 1: freely downloadable three trillion parameter model. Developers worldwide will be
Speaker 1: able to modify it, run it locally, deploy it without
Speaker 1: inference fees. That's not just a product launch. That's a
Speaker 1: structural challenge to the closed model rivenue model that Anthropic
Speaker 1: and open AI are built on. Chinese labs have been
Speaker 1: here before Deep Seek did this. The pattern is consistent,
Speaker 1: release capable models for free, commoditize the frontier, and let
Speaker 1: the pricing math do the damage. Deep Seek currently charges
Speaker 1: eighty seven cents per million tokens. K three charges fifteen dollars.
Speaker 1: Open ai charges fifty dollars. The gap at each level
Speaker 1: is widening, not closing. Here's the thing. The developer adoption
Speaker 1: data reinforces this. All five of the most used models
Speaker 1: on open router right now are Chinese owned ten Cent Shalmie,
Speaker 1: deep Seek, Mini Max, and z dot ai. That's a
Speaker 1: clean sweep. A year ago, that list would have looked
Speaker 1: very different. The signal here is that developer preference has
Speaker 1: already shifted before K three even fully releases. Within China's
Speaker 1: own AI market, K three's arrival triggered sharp the kinds
Speaker 1: z dot ai fell twenty seven percent minimax drops sixteen.
Speaker 1: Competitive displacement within the Chinese ecosystem is apparently happening faster
Speaker 1: than anyone expected. The geopolitical framing around all of this
Speaker 1: was deliberate. At Shanghai's World AI Conference this week, President
Speaker 1: She publicly endorsed open source AI, called for international corporation,
Speaker 1: and criticized what he described as US overreach in applying
Speaker 1: national security justifications to technology controls. The timing wasn't coincidental.
Speaker 1: Alongside that speech, twenty nine countries, including Russia, Pakistan, Kazakhstan
Speaker 1: and Laos signed an agreement establishing WAYCO, a new intergominental
Speaker 1: AI cooperation body, with the UN Secretary General present. Whether
Speaker 1: WAYCO delivers substance is an open question, but China is
Speaker 1: now formally positioning itself as the rules maker for AI
Speaker 1: governance in the developing world, and the US was notally
Speaker 1: absent from the room. Consider this. Here's the harder implication.
Speaker 1: For Washington. US export controls were designed to slow China's
Speaker 1: AI progress by restricting chip access. The evidence now suggests
Speaker 1: those restrictions accelerated a different outcome. Chinese lads optimized aggressively
Speaker 1: for performance per dollar and per GPU, producing architectures that
Speaker 1: compete despite lower compute access. Mai Twan trained a one
Speaker 1: point six tree in parameter model entirely on domestic Chinese processes.
Speaker 1: Quarley's Atlas nine to five zero was showcased at Shanghai
Speaker 1: as a credible hardware alternative the bottle Maker's narrowing not gone,
Speaker 1: but narrowing. A few months ago, senior voices in USAI
Speaker 1: expected China to reach capability parity somewhere around early twenty
Speaker 1: twenty seven. K three's arrival collapsed that timeline by at
Speaker 1: least six months, possibly more. The honest answer right now
Speaker 1: is that we don't know exactly how wide the remaining
Speaker 1: gap is because K three's full capabilities haven't been independently
Speaker 1: verified yet. July twenty seventh changes that the real test
Speaker 1: isn't the benchmark score, it's whether the open source release
Speaker 1: performs as claimed under real world conditions. If it does,
Speaker 1: the competitive map looks materially different than it did last week.
Speaker 1: That's what to watch. Thanks for listening. This podcast was
Speaker 1: built using AI technology, a Yes We production