China's Tech Race Moves Center Stage: Chips, AI and the Global Ripple

lot one this morning china's entire technology strategy on october 16 beijing put 40 technologies on the block proposing to control their export 23 of them are pure ai last week you and i talked about the black markets and war chests fueling china's tech race this is what happens when that race moves from the backroom to the front office it's not about smuggling anymore it's about setting the rules for the whole ring here's the sweep of the floor chinese chipmaker changshin memory technologies or cxmt announced a server memory breakthrough that sent shares of samsung and sk hynix into a sharp sell off the kospi index in south korea dropped 6% on the news meanwhile china's biggest contract chipmaker smic posted second quarter revenue of $3,000,000,000 up 20% their factories are running at 93.7% capacity they are running hot and who's getting squeezed nvidia its share of china's data center ai chip market fell to just 34% in the first half of this year shipments are down 44% from a year ago the big winner is huawei

whose domestic ascend processors are now the default chinese ai models from firms like deepseek and z dot ai are being rebuilt to run on them meituan just trained a 1,600,000,000,000 parameter model entirely on chinese silicon yep the bid's in the back and it's from a domestic player it's not just chips a new report from mobility global says chinese ev makers have an insurmountable edge in the mass market on cost speed and software but it's not all a straight run up funding for china's robotics sector saw a sharp contraction this month and that ai unicorn deepseek it had its 40 service outage of the year scaling is hard even when you have the chips now let's go back to the main event those export controls for years the us has been the only auctioneer in the room deciding who gets access to advanced technology on october 16 beijing picked up its own gavel the proposal puts large ai models ai agents and even semiconductor design methods under state control but here's the part everyone is missing

they aren't blocking access to the services they're blocking the transfer of the core technology you can still use a chinese ai app or access a model through a website but you can't buy the blueprints you can eat the cake but you can't have the recipe it's a strategic shift from just trying to catch up to actively managing who depends on their technology as one professor at the university of illinois put it us export controls backfired they spurred china to invest all this money to set up an ecosystem where they can now serve these applications by themselves that brings us to lot number two the proof the metal changshin memory technologies cxmt they're on the block with a new server memory module claim a breakthrough in architecture something called 4f squared do i hear a reaction from the floor i bit a drop in samsung a drop in sk hynix micron is down down down the whole

kospi index in south korea is down 6% 6% i hear seven nope nope 6% it is bam hammer's down let me tell you what that actually was that was fear was the market pricing in a future where china doesn't just make cheap memory but leads on architecture this four f squared design if it works at scale means more memory on a smaller cheaper chip it's a huge technical leap now the consignor hasn't provided independent verification the lot is sold as is but the bidders on the floor aren't waiting the paddles went down all over the world as a reminder this discussion is for informational purposes and is not financial advice so what does it all add up to you have the new rules of the game from beijing the export controls and you have the proof of concept from cxmt and smic the

domestic breakthroughs this isn't just about one company or one technology this is an entire ecosystem deciding it's ready to set its own prices i'm i'm bid somebody in this room always is for a long time the bidding on advanced tech only went one way this week we saw a counter bid the question was never if china could build its own independent tech stack it was when answer from the floor is coming in loud and clear the bidding starts now the price of underestimating that just went up