Our Lead in AI Is Fragile
The US currently has a lead in AI across chip design, data center build-outs, software tooling, fundamental research, and the production of the best frontier models. However, this lead is fragile.
Chinese firms are rapidly innovating at the technological frontier. At the model layer, DeepSeek R1, Alibaba's Qwen 2.5 Max, and Tencent's Hunyuan T1 are now competitive with the best frontier models from OpenAI and Anthropic. At the hardware layer, both Chinese startups such as DeepSeek and tech giants such as SenseTime are buying Huawei's Ascend 910C chip, which reportedly delivers 60 percent of the performance of an NVIDIA H100 for crucial day-to-day inference tasks. At the application layer, Chinese firms have gone into a frenzy, deploying frontier AI across the value chain, from cars to air conditioners.
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