"Instead of paralyzing China's AI sector, these controls have promoted domestic self-reliance. With no choice but to develop indigenous workarounds and architectural innovations, Chinese businesses are decoupling AI progress from sheer hardware volume. U.S. policies have undoubtedly bought time, but they have also ushered in a parallel innovation ecosystem totally independent of Western influence."
"Now the Trump administration is trying a different tack. By allowing conditional chip to approved Chinese customers, complete with revenue-sharing arrangements, the White House appears to be hedging its bets. The strategy banks on maintaining some leverage through controlled access rather than outright denial. Yet critics caution this could backfire spectacularly: American companies might be financing the very Chinese AI capabilities designed to render them."
"The DeepSeek Shock and Algorithmic Efficiency A year ago, DeepSeek'sR1 model sent tremors through Silicon Valley and Washington. The Chinese startup demonstrated AI reasoning capabilities closely mirroring those of OpenAI's ChatGPT o1, without access to cutting-edge chips restricted by U.S. export controls. "Algorithmic efficiency is a useful technique that enables developers to achieve reasonable performance compared to frontier models through inference-time optimization-essentially adapting the achievements of others for your own purposes," Martijn Rasser, Vice President of Tech Leadership at the Special Competitive Studies Project, tells The Cipher Brief. "DeepSeek's engineering is genuinely impressive, and this 'fast follower' strategy is very attractive for price-sensitive, commoditized AI applications.""
U.S. export controls prompted Chinese firms to pursue indigenous workarounds and architectural innovations, reducing reliance on sheer hardware volume. Chinese businesses increasingly decoupled AI progress from access to frontier chips and developed a parallel innovation ecosystem independent of Western influence. The Trump administration shifted toward conditional chip approvals with revenue-sharing to retain leverage while allowing limited access. Critics warn that controlled access may finance Chinese AI capabilities that could compete with American firms. Demonstrations like DeepSeek's R1 showed advanced reasoning on restricted hardware, illustrating how algorithmic efficiency and inter-chip optimizations can achieve competitive performance.
Read at The Cipher Brief
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