China may be subsidizing this for now in a way that US companies can't or won't - but if they keep building power infrastructure and the US doesn't, then it will no longer require subsidy from them. It will simply be absolutely cheaper (including profit margin) to serve tokens in China.<p>China is building for the future, while Western Democracies are afraid of the future, and of their own shadow.
I'm not sure how much of it is subsidies. If the open weight models are anything to judge by, China is taking price performance seriously, and the US model vendors are looking for performance at any cost. Like any other Pareto optimization, we end up paying 10x more for the last few percent improvement on benchmark scores.<p>Of course, like literally every other time this has played out in computing history, the companies focused on price performance will end up with more economic resources, and get to turn the upgrade crank more often and for longer.<p>Also, of course, China's way ahead of the US on things like renewables, batteries, and electrification of their economy. All of that feeds into cheaper power to run the models, but I suspect it's a second order effect vs. "improve the software".
> China may be subsidizing this for now in a way that US companies can't or won't<p>They're subsidizing this in many ways - Huawei chips, new DDR5 memory fabs, etc.<p>Ultimately, DeepSeek's architecture is significantly more cost effective than anything from Google, OpenAI, or Anthropic.<p>Presumably, they'll incorporate DeepSeek's TLA architecture to get all the benefits for next year's releases (if not this year's upcoming releases) which will bring down their costs...<p>They need to actually make money, though, so that might still not give them enough room to make enough money.<p>Ultimately, hardware depreciation is like 80% of total spending. So power is not as big of a deal in cost. The bigger problem is if you can get the power at all, not how expensive it is.<p>If you want to bring down inference costs, using less hardware is far more effective than getting cheaper electricity.
It feels like the US for years has operated under the assumption that homeostasis for the global economy would always be “designed in California, assembled in China.”<p>Like there was something in the American DNA that was lacking in China and innovation would always need to happen here.<p>But China it seems doesn’t need the US to produce great cars, devices, robotics, or AI. We absolutely need China to help us build all of the above.
Might be more far to say: they needed the US until they caught up. The massive straight up IP theft helps a lot here. Though theft might be too strong since a lot of companies knew what they were getting in to
Propaganda. We americans ate that shit up.<p>There's nothing special about anything we design in the US other than time and money commitment to create it. China did have some espionage of course going on, but the vast majority of shit isn't some secret. And with the US shitting on China with restrictions, we increasingly caused them to invest time and money into things they otherwise would have passively accepted as coming from the west. ASML sees the writing on the wall for themselves in particular.
Put another way: if the average US citizen doesn't subsidize the costs of these trillion dollar companies, China is gonna come get you. Funny that you talk about being afraid of your own shadow.<p>I have some exposure to utility regulation and from what I can tell some of the AI companies are "good actors" and willing to shoulder some of the burden. But others are pretty adversarial and want a free lunch.
Power is foundational to pretty much everything. Cheap power is going to give China a massive advantage in everything; AI is just incidental.
> Put another way: if the average US citizen doesn't subsidize the costs of these trillion dollar companies, China is gonna come get you.<p>The future is blatantly going to be electric. Between cars, heat pumps, ranges, etc, the quantity of kilowatt hours consumed will rise dramatically per capita because they are replacing burned fossil fuels.<p>We don't need to subsidize the trillion dollar companies, we can settle for just not cancelling wind and solar projects, and generally updating the grid infrastructure.<p>A rising tide lifts all boats. If the subsidies go to common infrastructure, that's good for everyone. There's no need to complain about a road being paved because it will benefit FedEx in addition to everyone else.
It's not really a bottleneck. US capital is building data centers in South Asia, MENA and SEA. Many of these countries offer tax breaks because they want US data centers, and they have abundant equatorial land for solar.<p>You might say that US would prefer sovereignty but that's a separate argument vis-a-vis strategic competition with China in particular.
I believe you are right. These models are at worst a 6 month lag to the costly frontier models, but the ability to scale energy production is years ahead of where the US is. That advantage is often under appreciated<p>Their cost of energy is what matters vs the US as much as speed buildout.
That is the talking point of OpenAI and a16z's super PAC:<p><a href="https://www.wired.com/story/super-pac-backed-by-openai-and-palantir-is-paying-tiktok-influencers-to-fear-monger-about-china/" rel="nofollow">https://www.wired.com/story/super-pac-backed-by-openai-and-p...</a><p>"Build American AI, a nonprofit linked to a super PAC bankrolled by executives at OpenAI and Andreessen Horowitz, is funding a campaign to spread pro-AI messaging and stoke fears about China."<p>In reality Xi has warned of AI bubbles. If China was really pushing it they'd be equal or ahead because so many researchers are Chinese anyway. Instead, China is building real stuff instead of focusing on hot air like a16z ("crypto", "AI", you name it). Maybe China should sponsor that PAC to accelerate the demise of the West.
"China is building for the future, "<p>Meanwhile, the USA is paying for its past excesses, with interest on its debt being the number two most expensive line item in the budget.<p><a href="https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/" rel="nofollow">https://fiscaldata.treasury.gov/americas-finance-guide/feder...</a>
Yea, I really don't see how much longer the US economy can hold on. The baby boomers are working overtime to rob multiple future generations of opportunity to feed their profits now.<p>The formerly "fiscal conservatives" that I know are working overtime explaining how the debt isn't a bad thing and we can just move numbers.
> while Western Democracies are afraid of the future, and of their own shadow.<p>Well, yeah. This is a technology that has the potential to make large chunks of the population unemployed.<p>Chunks of the population that took on debts prior to late 2022 with the understanding that there would be a way to pay those debts back with their labor.
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What the fuck are you talking about - have you seen what data centres are doing in the West? Do you want more of that?
To be honest, I’m sort of annoyed that the datacenter around the corner from my home closed. It was a five minute walk on 3rd street and I know of it because we used to have so many cages there 15 years ago. Now I have to drive to Fremont.
I have not fully seen or appreciated most of the negativity. Obviously there are exceptions to that but in my eyes it has largely exposed how vulnerable the west is due to poor infrastructure constructs and a lack of building out generation and transmission.
Yes, and yes!
Yes, I want cheap clean power.
Nope.<p>We have exported production to China in many things, we forget that we had dark satanic mills of our own.