The AI Chip Race for Technological Supremacy: Has the United States Already Lost & What Does That Mean for the Future?
With Trump’s first months back in office many are looking on curiously as to the big changes the president will decide to make in the United States’ greatly needed change of direction.
One of the subjects to which Trump has already made a big announcement on is the matter of the US’s future on semiconductor/chip production.
Trump has promised to scrap the Biden Administration’s CHIPS Act (which was a promise to invest $52 billion in the domestic production of chip manufacturing in the US). The CHIPS Act was primarily in service to the military intelligence complex and promised to spend money that the US didn’t have in chasing a pipe dream.
With the US increasingly lagging behind in the chip manufacturing race - China’s semiconductor manufacturer SMIC is now the third largest in the world, after South Korea’s Samsung and Taiwan’s TSMC, the latter being the top chip manufacturer – Trump has promised to turn the situation around, however, it appears this turn around will come at the cost of South Korea and Taiwan.
On March 3, TSMC CEO C.C. Wei standing alongside Trump and Lutnick announced that the company will invest $100 billion to build three chip production plants: two advanced chip-packing plants and an R&D facility in the US, on top of the previously promised three chipmaking plants.
Trump has stated that Taiwan’s TSMC would be subject to additional tariffs if they manufactured them outside the US. He has threatened to impose duties of up to 100% on chip imports reported Nikkei Asia.
Lutnick said such key manufacturers, such as TSMC, “want to avoid tariffs that, if they’re not here, they’d have to suffer.”
Samsung is also expected to face a similar situation. US production of advanced chips will be handled mainly by Taiwanese and South Korean players that have the requisite technology. The two countries together accounted for just under 70% of chip investment in the US, as of last year, by one estimate, and TSMC’s additional spending will expand its role further, as reported by Nikkei Asia. One might ask with such numbers, is there any actual US investment into its own chip manufacturing?
Trump has stated that with TSMC and Samsung focusing on US chip production, he expects that US chip output should increase to 40% of the global total. It is not clear how Trump plans on actually achieving this besides forcing TSMC and Samsung to carry the US’s dead weight.
TrendForce has a more moderate forecast, that by 2030 the US will account for just over 20% of global output of advanced semiconductors used in applications such as Artificial Intelligence, after drawing investment from Taiwanese and South Korean chipmakers. This would be double its 2021 figure. Whereas Taiwan’s share is forecasted to shrink from 71% to 58% over the same period, along with South Korea’s share falling from 12% to 7%. We can see the writing on the wall here, the US is expected to increase, while Taiwan and South Korea’s share is expected to decrease as they are told they need to amp up investment into US chip production. Who could resist such a brilliant business incentive right?
However, the more unpleasant reality is that thus far the US has in fact dropped in its share of global semiconductor production from 37% in 1990 to 10% in 2022. This downward trend is expected to turn around with Trump’s new “incentivising”.
This is to prioritise and boost the production of AI chips within the United States. Trump, who has cancelled the CHIPS Act, has taken a different approach to “incentivizing” American production, favoring tariffs over subsidies. But could this really be called incentivizing at this point?
By TSMC or Samsung, refusing to produce chips in the US that will go to American use, they could suffer from tariffs that would cause their companies to take a tremendous hit, possibly a death blow. TSMC and Samsung make up a large part of the Taiwanese and South Korean economies as well. Thus, such an “incentive” by Trump would also put into jeopardy those countries’ entire economies if TSMC or Samsung were to refuse.
Trump has brought up the domestic tariff model of US President William McKinley in recent speeches which is a perfectly fine thing to do.
Domestic tariffs were meant to protect US domestic production from the competitive prices of those countries already established in the manufacturing of a product. Like any country that is entering into a new line of production, it takes time to establish the machinery and capability for efficient, cost-effective production. By imposing tariffs on other countries, it increases the prices of their products such that US domestic products can compete.
The whole point of using tariffs is to boost your OWN productive capabilities domestically as well as the creative output that comes with the need for high-density problem solving. However, Trump’s tariffs are not being used the way President McKinley had used them to help strengthen America’s domestic production.
Instead of bringing the CEO of TSMC to the US to announce his $1 billion investment into US chip production while at gun point, Trump should have announced something that included a science driver program within the United States to boost its manufacturing capabilities in various fields of industry (something that has been scrapped over the past few decades) as well as real incentivising for the American people to enter trade school (i.e. apprentice in blue-collar industry jobs) and announce an upshift in university education that would benefit American industry. Instead, he made the announcement he made, something that again, is being mainly done to give the US military industrial complex a boost, not the American people. If Trump actually cares about the American people, why has he not made such announcements with a focus on American blue-collar jobs and higher-tech jobs?
Rather, Trump is attempting to boost American productivity by threatening foreign companies with aggressive tariffs, to begin manufacturing within the US (on top of their production within their own countries) and manage these American factories. This is being sold (as its public face) that the US makes up the largest consumer of TSMC and Samsung chip production, Apple being the top, and thus justifies why TSMC and Samsung should agree to this massive investment into US factories.
This is an incredibly bad idea, and the US has now sent a very strong message to the entire world that if you are producing a product where the US is your top client and it wants in on the field, the US is ready to impose devastating tariffs on your trade unless you transport your production over to the United States, pay for the entire thing, share your technology with them and manage it. You essentially become subservient to the US’s demands since your production relied upon their business for the majority of your profit. Otherwise, your company will be ruined since you cannot afford to have 100% tariffs invoked from your top client…
[I should add here, that it is also clear that the United States wishes TSMC to set up their factories within the US with no guarantee in the future of what the fate of TSMC will be (or Taiwan for that matter), the US content that it now has advanced chip manufacturing capabilities in its own territory in service to its military.]
You do realise what the lesson is here for the future right?
The message is, “it is better not to do too much business with the US and if you have other options take them since no one should be too reliant on US business since they think they deserve a cut of your profits like the mafia operates.”
However, Trump’s “incentivising” is even worse as a business model for the US in its AI chip race with China.
Chip manufacturing is an incredibly challenging and costly business. There is no other business that can really compare with that of chip manufacturing presently in terms of the demand and level of complexity. Chip manufacturing requires approximately 50 steps and no country presently is able to specialise in all steps. That is, no country presently is self-reliant in chip manufacturing. China is the most likely to reach self-reliance, however, this is still something that is projected to occur several years from now.
Thus, the current situation is that there are several countries who specialise in one of the fifty steps in chip manufacturing. One example is that of the Netherlands’ ASML, which is the only company in the world who is capable of EUV technology (until recently, more on this shortly), which is essential for advanced chip manufacturing - 7nm, 5nm, 3nm chips. China has been banned from access to EUV (due to the US putting pressure on the Netherlands) and even attempted to ban China from DUV lithography technology, of course the reasons stated were not the truth - that the US simply can’t compete, but rather that China is a security threat. However, the Netherlands refused to ban China from access to DUV, stating DUV was already old technology and thus could not be justified as a “security threat.” It should also be noted that China is a top trade partner of the Netherlands.
TSMC Founding Chairman Dr. Morris Chang put this smack of reality into this American pipe dream most bluntly in remarks addressed to the U.S. as reported by NIKKEI Asia:
To be fair the word impossible has been thrown around a lot in the forecasts of who will be on top in the chip race. However, Chang is the founder of TSMC which should count for something and it is clear that despite the US apparently wishing hard to be on top, the reality is that they have very little production capability to meet the demand as well as the skill that is required to compete in the chip race at this point.
The US has found itself behind in all things production wise and it is not a matter of simply stating goals, there needs to be a massive production boost in not just the chip manufacturing but all other areas of industry if the US wants to continue to even hold a first world country status at this point.
The reality is that Trump’s insistence that Samsung and TSMC carry the US on its back in the middle of a race to the finish line, could cost all three the top position and actually be doing China a favor and accelerate her to the position of number one.
Americans’ Reality Check in the AI Chip Race
Interestingly, just a few years ago the United States had shot itself in its own kneecap in the middle of a race for technological supremacy since the crisis of the semiconductor/chips backlog (triggered by the United States by forbidding China’s access to necessary materials in chip manufacturing), had heavily hit the consumer market especially the automobile industry, as well as the United States’ ability to churn out advanced weapons systems in mass quantity.
In December 2020, SMIC along with other Chinese firms were put on a U.S. blacklist for exports called the Entity List. This was an attempt to prevent SMIC, China’s largest and most sophisticated semiconductor producer, from importing the necessary material and equipment to manufacture 14nm and 20nm semiconductors/chips, which also ended up cutting off the world markets from China, the main supplier of these chips.
TSMC (Taiwan) and Samsung (South Korea) are the present titans in the cutting-edge semiconductor industry (that is 7nm, 5nm and 3 nm chips), however, China’s SMIC was the largest supplier of 20nm+ chips which are essential for the consumer market. When China was greatly hindered from participation in this market it created a bottleneck since TSMC and Samsung, who do not specialise in bulk manufacturing of lower grade chips, were already way above capacity. This created a massive global bottleneck in semiconductor/chip production. [East Asia is manufacturing about 75% of the chips in the world.]
The United States is attempting to increase its onshore manufacturing capabilities so that it can control much more of the supply chain within its domestic market, rather than the present reality, which is that there are several countries dispersed throughout the world who are the specialised leaders of one of the approximately 50 steps, requiring high standard specialisation, in manufacturing cutting edge semiconductors.
The specialising process for all the components required for leading chip manufacturing is so costly (in the hundreds of billions) and precise that it is estimated that it would take at least 4-6 years or more to master each area of specialisation.
SMIC is now the third largest chip producer, with South Korea’s Samsung second and Taiwan’s TSMC first.
SMIC was able to begin production of 7nm semiconductors in 2022 (possibly as early as 2021) which has entered it into the realm of advanced semiconductor manufacturing. Just a few years ago everyone was laughing at SMIC even being a competitor with Intel. SMIC had achieved this goal, which was thought impossible, in 2022 despite still being banned from EUV technology from the Netherlands’ ASML.
Thus, those simply accusing China of just “copying” TSMC N7 have no comprehension that to actually successfully manufacture TSMC N7 yield optimization level chips required that China create innovative solutions as a response to their being banned from access to steps in the chip manufacturing process that all thought impossible to succeed without.
Instead of accusing China of merely copying, her critics should in fact acknowledge this impressive achievement for what it is. China is increasingly finding itself in the lead of the U.S., despite being the only country banned from full participation in this market.
Again to reiterate, China achieved the ability to make 7nm chips back in 2022, possibly as early as 2021, without EUV technology, to which the US had banned China from access to and which was thought an impossible achievement without. The Netherland’s ASML is still the only company in the world that offers EUV processing for chip manufacturing…until recently.
China made the announcement just over two months ago that it has now created its own EUV technology which has taken a completely different path from the Netherlands.
Pascal Coppens writes in his monthly newsletter (which I suggest everyone subscribe to, it’s free, to get a more balanced perspective on what is occurring in China):
“Chinese scientists are pioneering new approaches to extreme ultraviolet (EUV) lithography, with a research team from Harbin Institute of Technology (HIT) taking a completely different technological path from Western methods to generate EUV laser light.
EUV lithography machines are essential for producing chips smaller than seven nanometers. Currently, the only company capable of manufacturing EUV machines is the Dutch firm ASML. Due to strict U.S. export controls on EUV machines, China has been actively seeking ways to develop its own EUV lithography technology.
ASML’s EUV light source relies on a laser-produced plasma (LPP) method, which uses high-energy lasers to bombard liquid tin droplets, creating plasma. In contrast, the Chinese team employs a laser-induced discharge plasma (LDP) method. This involves vaporizing a small amount of tin into a cloud between two electrodes, followed by the application of high voltage to energize the tin cloud and convert it into plasma. The resulting collisions of electrons and high-valence tin ions generate EUV light.
The LDP method offers several advantages over LPP technology, being simpler, more cost-effective, and capable of directly converting electrical energy into plasma with significantly higher energy efficiency. The resulting EUV light source has a wavelength of 13.5 nanometers. However, optimizing the parameters and timing of discharge pulses remains a critical technical challenge. Additionally, concerns have been raised about potential power output limitations with the LDP method.
[The Netherland’s] ASML maintains that China is still years behind in EUV lithography development. Whether this gap can be closed remains to be seen—only time will tell.”
The point being that China has been consistently achieving remarkable feats in innovation in order to overcome the odds that have been set against her. In the case of EUV, China has discovered a completely different route in achieving its effect and thus a new patent in EUV technology.
The winds are changing in the chip race and a “China shock” is coming for the chip industry as China has reached a level of efficiency in production of older semiconductors and niche substrates at much lower prices than had been previously thought possible.
The American company Wolfspeed, has up until recently been the global leader in the manufacturing of SiC wafers (required for chip manufacturing), made of silicon carbide. Nikkei Asia reports that just two years ago, a mainstream 6 inch SiC wafer from Wolfspeed was $1,500, but Chinese suppliers can now compete at as low as $500 a piece or lower.
Nikkei Asia reports “Wolfspeed was the undisputed leader in the SiC wafer market until just three years ago, when intensifying Chinese competition began to take its toll. Shares of Wolfspeed were trading at less than $6 in February, down more than 96% from their peak in 2021, when the world experienced an unprecedented chip shortage.”
CEO Gregg Lowe, who had led the Wolfspeed chipmaker for seven years, left late last year amid the company's deteriorating financial performance. Other SiC wafer makers such as Rohm of Japan have reported consecutive quarterly net losses since the middle of 2024.
Because most production equipment for these semiconductors falls outside the scope of U.S. export controls, China has been able to make rapid advancements, with at least 688 billion yuan ($95 billion) in national chip funding commitments since 2014, as reported by Nikkei Asia.
China's mature chip capacity will account for about 28% of the global market by 2025, according to IDC estimates, and industry association SEMI says that figure could grow to 39% by 2027.
Let us remind ourselves that the US has dropped in its share of global semiconductor production from 37% in 1990 to 10% in 2022.
This is making Trump’s projection of US output at 40% of the global market in advanced chip manufacturing appear more and more like hopeful thinking with not much to back it.
In fact, the obsession over manufacturing state of the art semiconductors by Taiwan, South Korea and US has left approximately 90% of the chip market to China. China is also working on cutting edge semiconductors (which is slower than it would otherwise be due to their being banned from full participation in the chip market) however they are focusing on all levels of production in chip manufacturing, something no one else is doing.
SMIC's revenue hit a record of more than $8 billion in 2024, driven by a rapid shift toward local chip production, according to co-CEO Zhao Haijun. That is more than double the figure in 2018, before the U.S.-China chip war took off.
SMIC is now the world's third-largest contract chipmaker by revenue after Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, and its market capitalization has surpassed those of several European, U.S. and Taiwanese rivals. Its annual capital expenditures have soared to over $7 billion in the past two years, compared with about $1.8 billion in 2018, and it has built additional plants in Shanghai, Beijing and Shenzhen as reported by Nikkei Asia.
Over three years ago China began to be a real contender in the chip race. There were many stories from the west claiming this was an impossible task for China since they were too far behind on top of the fact (though this was often not admitted) that they were heavily banned from acquiring key materials and use of key technologies for chip production. Instead, we have seen China making what were thought to be impossible accomplishments such as the production of 7nm chips in three years (when typically it takes at least seven years to reach this capacity). There were also attempts to claim that Chinese chips would be of poor quality and were unreliable, now we see China capable of creating superior chip products for what were thought to be impossibly low prices.
In fact, Asia in terms of fabrication capacity, foundry wise has 80-90% of its revenue coming out of Asia. This has been the case for many years. Thus, to claim that China or anyone in Asia for that matter was behind the US has been completely false. China has not been behind the US for some time, rather, they have been behind South Korea and Taiwan.
However, China is not only facing the typical challenges of advance chip manufacturing which are tremendous but, in addition, are faced with creating wholly new innovations in chip manufacturing in order to bypass the bans on key technologies such as EUV.
At this point it should be clear that it is in fact the US who is behind China in the chip race. However, is it possible for the US to catch up, especially since they plan on sling-shotting themselves forward at the expense of TSMC and Samsung?
The answer is no, but don’t take it from me, let us remind ourselves of the words of Morris Chang, who founded and formerly chaired TSMC…
Americans’ Reality Check on Who Really Benefits from US Chip Production
Trump has rightfully criticized the CHIPS Act, which was passed under the Biden Administration and promised $52 billion towards US domestic chip production. However, when we look at the priorities of this act, it was to principally benefit the military industrial complex. Not the American people.
Notice the only concern she names by name? The military industrial complex. At some point Americans need to ask themselves, what is the point of all of this military equipment if the American people’s livelihood is not economically secure, in violation to the promise of freedom from want as one of the four core American freedoms. How is the American government providing the American people security if they do not even have enough food to eat and have no homes to live in but increasingly find themselves in ghettoized communities living like an ant colony.
Or Elon Musk’s ridiculous house box. They are literally selling boxes for homes as if this is some sort of luxury product.
Why is it ok for Americans to increasingly have no access to the most basic of basic needs while hundreds of billions of dollars are poured into Department of Defense Frankenstein projects?
China is not just investing in their military capacity but they are investing in all fields of industry.
China now has the second largest military in the world but they are spending 2% of their GDP on their military, a number that Trump said to Europe was the minimum they should be spending. While the US has spent many times more than this, to the detriment of their industrial growth and welfare of their citizens.
As the US military industrial complex grows and grows while the standard of living of its citizens shrinks, China has experienced a dramatic increase in their middle class, which totalled only 3% of the Chinese population in 2000 to become 54% today in large part due to their increase in energy production.
Energy being one of the most important factors determining a country’s socioeconomic index.
Meanwhile the United States has decreased its energy production to the detriment of Americans’ standard of living.
While China is increasing its energy production in all fields, including thorium nuclear reactors.
As we can see in the graph above, the United States is still on top but due to a complete reliance on past achievements in nuclear from decades ago and has been declining over the years with -11 reactors over a period of ten years. China on the other hand has prioritised investment in nuclear power and increased +39 nuclear reactors over the same period, far exceeding any other country in its nuclear energy development.
In addition, China has clearly made it a priority to invest in the infrastructure and industry of its country to the benefit of its citizenry.
The United States has, what is effectively, zero % high speed rail presently. With Trump even decreasing funding for proposed high speed rail projects after only a few months in office.
In the case of nuclear fusion the United States has taken the approach, over several decades, of funding below the “fusion never” level (see graph below).
China has taken a different approach and has funded their fusion research with the goal of actually achieving fusion. Over the years China has made several breakthroughs towards the goal of fusion energy.
OilPrice.com writes this very month:
“China just achieved another milestone breakthrough for nuclear fusion technology, bringing the country closer to achieving its goal of commercial nuclear fusion by 2050. This week scientists announced that the nation’s Experimental Advanced Superconducting Tokamak (EAST), achieved a sustained temperature of 100 million degrees Celsius, shattering previous records and bringing nuclear fusion closer to reality.
This breakthrough is just the latest in a long line of milestones for China, where the government has been investing heavily in nuclear fusion research and development as part of a global ‘high-stakes battle for nuclear fusion supremacy.’ Beijing has been outspending every other country in the world on fusion research at approximately $1.5 billion per year – approximately double Washington’s spending.
The potential ramifications of achieving commercial nuclear fusion are difficult to overstate. In the words of a recent Daily Galaxy report, ‘If China or any other nation succeeds in making fusion commercially viable, it could trigger an energy revolution, transforming how the world powers homes, industries, and even space exploration’.”
It is only since China has been making waves in fusion research that we began to hear its discussion once again in the United States (which before then would get you laughed out of the room). However, once again, the US’s interest in this field is in service to…you guessed it – the military industrial complex.
The Lawrence Livermore National Laboratory is the leading fusion nuclear research institute in the United States. Notice on their own webpage their priority in fusion research which is “to enable US security and global stability”, i.e. in service to national security with no mention of uplifting the well-being and standard of living of the American population. It is only in reaction to China’s investment into fusion energy that the US has had a sudden boost in interest, clearly with the only focus of a military application.
It is clear that this is the United States’ primary, if not only, concern in its race with China and that they have taken a stance that they will not “allow” any country to be technologically superior to them, no matter what the qualitative accomplishments are in benefiting a population. It is about the military and political hegemony, they are not truly concerned about the future well-being of their populace.
An independent commission established by Congress recently concluded: “If a potential adversary bests the United States in semiconductors over the long term or suddenly cuts off U.S. access to cutting-edge chips entirely, it could gain the upper hand in every domain of warfare.”
The Centre for Strategic and International Studies (CSIS) reports “China’s leaders have set a goal to build a ‘fully modern’ military by 2027 based on ‘informatization,’ ‘intelligentization,’ and ‘mechanization,’ investing heavily in technical areas which support such an approach, such as AI, quantum computing, hypersonics, and microelectronics.”
Notice here the irony, that the greatest fear of the US is that China does to the US what the US has in fact been doing to China all along. And all they can see as a benefit to being on top in the chip race is military supremacy.
There is never any discussion of how chip manufacturing will raise the standard of living of the American citizen. There are only statements of domestic and global so-called “security” but security from what exactly? Last time I checked, it was the US bombing several countries every year.
The case with chip manufacturing is proving no different with the US’s priorities in massive expenditure.
The CSIS report acknowledged that China’s advances in semiconductor technology are primarily driven by the development of devices for commercial use. Thus, again China is investing in the consumer and industry chip market in order to boost the standard of living of its populace. Thus, the military expenditures are not a priority for China but rather the consumer and industry productions sectors. Something that the US has allowed to atrophy through no fault but their own.
China’s Decentralization vs America’s Centralization
Ironically it is the US that is using a centralised system that revolves around servicing the military industrial complex. It is their pure focus on the benefit of the military that has in fact caused them to be lagging behind in the chip/AI race.
What China has done in fact is, to set up an ecosystem in Shenzhen that will allow for top industrial focus on all levels of the semiconductor production line for commercial use, while SMIC, HUAWEI, and HiSilicon focus on the cutting edge semiconductor technology. China’s semiconductor ecosystem is in fact a form of decentralization, while the United States is approaching the semiconductor race from an approach of centralization (around the military industrial complex).
The US has been so concerned about what China will do if they become number one in technological, industrial, and R&D capability. However, the reality is, China is already leading in the greater majority of all fields that will play a significant role in determining a country’s advancement in technological supremacy.
Above is a recent study conducted by the Australian Strategic Policy Institute which found that China was leading in 37/44 of the technological fields thought to be most important in deciding technological supremacy in the future. In other words, the ASPI found that China was the leading innovator in the world in 37/44 technological fields determining technological supremacy for the future.
Thus, the reality is that no one is “stealing” from the US anymore, certainly not China, what is there to steal from someone lagging behind in a race? Rather the US has only its very own policies to blame for why its industry and standard of living have dropped for the American people.
China has not worked so hard to achieve this from an aggressive perspective. Rather it is a focus on self-reliance, and can we blame China for this being a priority when the US has done everything it can to block China from participating in the markets and world trade, and to hinder its production and participation in leading technological fields while making very blatant threats of a military escalation towards its country.
The US has insisted on being number one at the expense of all others.
This is what is motivating the multipolar world outlook, the global south that makes up the greater majority of the world population – the right to self-determination.
It is ironic that the US has created its own isolation in its aggressive attempt to isolate others. Where they have sabotaged Germany and France in their attempt to set up the EMS (European Monetary System), Japan in the DRAM markets and their intervention into their central bank system creating a massive depression and suicide rate. It has banned countries like France and Japan from trading materials for nuclear plant production to countries like Brazil and South Korea in the past. The list goes on and on of how the US has kept a number one position not through merit but through aggression, threats and sabotage.
Unfortunately this continues to be the case with Trump’s new policies in office. His cancellation of the CHIPS Act is a good thing since it was asking the US to spend money it did not have on what were ultimately going to be military applications. In a country where the standard of living is drastically dropping this is an immoral policy from even a purely American standpoint.
However, Trump’s answer to this has been to threaten tremendous tariffs on South Korea and Taiwan if they do not spend billions of dollars to aid US in becoming number one. Has this not become embarrassingly transparent at this point? Is the US really going to be so arrogant as to claim they are number one by threatening countries who are leaders in their field to spend their own money to share their own trade secrets in order to benefit US supremacy (in what will be military expenditures) to the detriment of their own companies and country’s revenue?!?!?
As already mentioned, domestic tariffs are fine under the McKinely model, which Trump has mentioned in recent speeches, However, what Trump is doing is not a use of tariffs to boost domestic production which means increasing self-reliance and creating industries to meet the production demands. If this were the case it would be funding such projects through their own credit system with the education of their own people to achieve such heights, not using the money and innovation of other country’s by using threats. By putting a gun against the heads of other countries to hand over their technology. This will not benefit the actual intellectual creative output of the US. The US has rather quite literally become a parasite at this point. And its excuse is that these countries need to chip in to US supremacy for their “protection” from China. Despite the fact that it is the US who has recently caused the greatest internal sabotage of these countries’ economies as Richard Werner has gone over in his book Princes of Yen.
This is an imperialistic policy and it is quite literally stealing, not a secretive stealing but a robbery at gun point in plain sight for everyone to see. And somehow the Americans are not embarrassed by this?
Once again the US shows it has double standards in the case of TikTok. China has been criticized incessantly for limiting the actions of such companies such as Google, and Facebook from operating within their own country. They criticized China for not being an open democratic country, but wanting to censor what the Chinese people could see outside their own country.
Now we see the US not only making the same accusation to TikTok but in addition are demanding that they be sold a significant portion of ownership of the company including its algorithms! Does this not equate to stealing? It certainly would be seen as such by Americans if the situation were reversed.
Ironically when TikTok had been banned temporarily in the US, Americans looked to access RedNote, a Chinese social networking and e-commerce platform known as Xiaohongshu in Chinese. On RedNote, Americans were able to view videos from China that they had not had access to before through even TikTok. RedNote is known for having more wholesome content and has more of a focus on everyday living rather than the typical idol worshipping etc. content of TikTok.
American youth were amazed to see that the Chinese people were not in fact what they had thought. They were not glazed eyed automatons, but rather were people just like them. Thus, the US’s attempt to ban TikTok actually had quite the backfire. If Americans were able to see that the Chinese were human beings just like them how could we justify a future war (a war we are told is inevitable) with the justification that they are a threat to our way of life if they in fact live very similarly to how we do? Perhaps even better? – which was also an observation made by many during this TikTok backfiring.
This US war drive is being done with the justification that China is still behind and must be kept behind the US for “global security” despite the fact that most of the world is in support of the multipolar framework.
This is also why in western media there is a constant attempt to frame China as if it is always lagging behind and whatever successes they do have are not honest successes but the stealing from others. This could not be further from the truth.
The reason why this is being done is to keep up the fear of China.
If we are led to believe that China has not yet in fact achieved technological supremacy, the scenario can be created that we need the US’s protection to thwart what China “plans” in achieving a “cruel dystopic world domination”. However, if China has already achieved technological supremacy and there is no evidence of China in fact using this towards imperialistic policies then increasingly we see a situation of “the boy who cried wolf.” Thus, in order for the US to convince Americans of its war agenda against China, Americans must believe that China is behind and thus still hindered in its “true” plans as global hegemon.
At the beginning of the new year, China made yet another splash in tech news with the announcement of DeepSeek’s new success.
Pascal Coppens’ writes:
“As of today, everyone is talking about DeepSeek. Yet, until recently, few had even heard of it. That all changed on January 20, 2025, when DeepSeek unveiled its R1 model—a direct rival to OpenAI's o1. Notably, this was also the day Donald Trump was inaugurated as the 47th President of the United States…On January 27, DeepSeek had caused nearly $1 trillion to be wiped from U.S. stock markets.
…We could dive into the technical specifics—its innovative Mixture of Expert model, memory optimizations, low-level programming beyond CUDA, use of synthetic data, and automated reinforcement learning—but let’s skip that. After all, you can always ‘ChatGPT it.’
What sets DeepSeek apart is its extraordinary combination of power, affordability (even free), and accessibility due to its open-source nature. While ChatGPT is undeniably powerful, it lacks the same level of accessibility and affordability. DeepSeek’s groundbreaking optimizations are impressive, though they could just as easily have come from OpenAI, Anthropic, or Meta.
The real surprise? A Chinese company achieved this first. It revealed a persistent bias among business leaders who still underestimate China’s ability to innovate at the forefront of emerging trends. As a result, much of the global discourse has focused more on Silicon Valley’s viability of its scaling law models and the stock market losses than on the transformative potential DeepSeek brings to the world.
Did DeepSeek come out of nowhere? The answer is no… DeepSeek V2 had already been recognized as the 7th most powerful large language model (LLM) in China, according to SUPERCLUE. Its founder and CEO, Liang WenFeng, has spent nearly a decade developing AI-driven strategies for quantitative trading at his hedge fund. Remarkably, DeepSeek was built without the fanfare and hype surrounding OpenAI. This achievement demonstrates how a dedicated and intelligent research team— even one based in China—can rival the elite and expensive minds of Silicon Valley. Interestingly, Sam Altman remarked a year ago that it would be "hopeless" for a small startup with limited resources to compete with OpenAI in training foundational models. Since the emergence of DeepSeek, his perspective has shifted.
What I find most impressive isn’t that DeepSeek was relatively unknown, but that its team is entirely Chinese, with no overseas experience, and minimal prior work history. This was truly a David versus Goliath battle—not in terms of financial resources, but in expertise—and David emerged victorious. It was precisely their lack of conventional experience that allowed them to think outside the box and pioneer these groundbreaking innovations.
It’s time to finally dispel the myth that Chinese innovation is constrained by China’s ‘governance system’ or that Chinese can only mimic or steal to stay competitive. DeepSeek’s success was driven by a determination to prove these stereotypes wrong and showcase the untapped potential of Chinese innovation. To further solidify this point, they open-sourced their model, inviting the world to look under the hood and see their ingenuity firsthand.
…Did DeepSeek use OpenAI’s output data? The answer is yes. At the end of January, OpenAI and Microsoft began investigating whether DeepSeek had employed a technique called “distillation.” DeepSeek also engaged in web data collection—commonly referred to as “scraping”—a practice OpenAI had used before them. Interestingly, a week later, OpenAI chose not to pursue legal action against DeepSeek, and Microsoft even made DeepSeek available on its Azure platform. In many ways, DeepSeek played the role of a Robin Hood for the AI world, democratizing large language models and liberating both China and global AI developers from Silicon Valley’s billion-dollar castles and moats.
This isn’t simply a China versus U.S. AI conflict; it’s a broader battle between opensource and proprietary approaches. DeepSeek embodies the push for AI democratization, making cutting-edge models accessible to all. The U.S. chip export restrictions, such as the denial of H100 NVIDIA chips, inadvertently nudged China towards embracing open-source innovation. But beyond that, this approach reflects a cultural shift—rooted in what is known as “ecosystem thinking.”
Why was this unexpected? Geopolitics has often blinded us to the potential of Chinese grassroots innovation. For the past 18 months, [Pascal Coppens has] been warning in [his] newsletters that China is rapidly closing the gap with Silicon Valley’s LLMs. The breakthrough could have come from any of a dozen impressive Chinese models—but it was inevitable. Surprisingly, DeepSeek wasn’t even considered among the “six little AI dragons” that secured major funding: Moonshot AI, Minimax, Baichuan, Zhipu.ai, 01.AI and Stepfun. Why don’t Moonshot’s Kimi 1.5 or Alibaba’s Qwen 2.5-Max—both of which rival DeepSeek today—receive the same level of attention? The answer lies in the media’s preference for stories driven by hype or controversy rather than nuanced trends.
Looking ahead, Chinese generative AI is poised to revolutionize industries in 2025 by delivering optimized LLMs that require fewer resources. DeepSeek isn’t a fluke—it’s the product of a Chinese innovation methodology. While China matches the U.S. in capital, talent, infrastructure, and data, what sets it apart is its inversive approach to innovation. Chinese AI models aren’t designed to “sustain technology leadership” of a handful of elite firms to drive their stock prices; they’re built on “sustainable technologies” focused on scalability and real-world impact. It’s a classic case of the hunted adapting to outwit the privileged poachers.”
To read more from Pascal Coppens’ newsletter refer here.
Thus, DeepSeek is another example of how China is using the strategy of decentralization in approaching the AI race in distributing it to the public rather than keeping it in the possession of a few hands to serve an “elite” agenda.
For more on the DeepSeek story refer here:
The US has become so desperate at this point to be regarded as a world leader in technological innovation that they have restricted themselves to talking about the 7 out of 44 fields they are still leaders in, though the walls are closing in fast.
We should ask ourselves at this point, why are we so afraid of what China might do if it ever reached supremacy when the reality is, it already has reached supremacy, and China has not changed its approach or policy from what it has always been. Win-win cooperation.
China has achieved its supremacy in these fields from genuine innovation. The US has in fact been sabotaging itself in its ill-placed focus to keep others down rather than to lift itself up.
(If pressed for time watch from 15:18 to the end for the most impressive part of the video)
The above video showcases a top Grade 5 Chinese student with that of a Canadian Chinese engineer who graduated from the University of Waterloo in Ontario, a top engineering university in Canada. What is most striking in this video is that the Grade 5 student never relied upon using any formulas but rather clearly came to the answer in their mind and when asked how they came to the answer they displayed a use of reason and logic, as well as geometric proofs. Whereas the Canadian Chinese engineer student relied upon formulas, to a crippling degree, as we see especially in the last question (at 15:18 of the video).
When asked at the end of the challenge what the engineer thought about the difference between education (in this case in Canada) vs China, he responded that the Chinese rely more on reason, logic and geometry to figure out the solutions whereas in the west we rely more on memorisation and formulas.
This of course is very interesting since the stereotype, or prejudice, of the Chinese is the very opposite. That they are the ones who only memorise whereas we are the ones who innovate using out of the box problem-solving. This video shows a very stark reality that how we are educating our youth is in fact not to be innovators, whereas China is focusing on an education to promote creativity and innovation.
Is the US Headed for Techno-Feudalism under Elon Musk?
I have already discussed the fallacies of how the west is presently looking at AI and the belief in Transhumanism in my paper “The Realpolitik of Transhumanism: A Cyborg Bohemian Rhapsody.”
Bizarre that from the patriot crowd in the US there appears to be a disdain for Israel’s Yuval Harari, who has been promoted by the WEF, but not Elon Musk, who pretty much promotes the same outlook.
See Matt Ehret’s essay ‘Elon Musk as Tesla 2.0: The Legacy of Technocracy Inc. and the Push for a North American Technate” which goes over how Musk’s grandfather was the founder of the vision for a “Technate of America.’
While the US becomes increasingly more seduced by the empty promise of immortality and eternal youth…to which we have no shortage of sci-fi films “warning” us of how this all “inevitably” comes to fruition which is a transhumanist/upgraded biological hierarchy of a “master race.” This is at least the eternal dream…
This is reminiscent of Oscar Wilde’s A Portrait of Dorian Gray. Dorian who only wishes to live forever as a young beautiful pleasure seeker represents the aristocrat's hedonistic worldview: that beauty and sensual fulfilment are the only things worth pursuing in life. Knowing that he will lose his beauty with time, Dorian impulsively chooses to sell his soul and asks for the portrait, rather than himself, to age and fade. His wish granted, Dorian pursues a libertine life of varied amoral experiences while staying young and beautiful; all the while, his portrait ages and visually records every one of Dorian's sins. This of course ends badly for Dorian, who is the cause of his own self-destruction.
Eternal youth, what a seduction indeed, though, I guarantee you, not only is it not possible, but you are not invited to that party.
Meanwhile, China is putting out videos such as this, promoting a rightful placement in moral obligation as AI technology comes to hold more prominence in our world. AI as an effective tool to aid in problem-solving to which we always hold a moral responsibility in overseeing, rather than something we idolise or worship as a replacement to our own thinking and reasoning.
At this point Americans can really no longer point the finger at China alone and ask what does China plan for the world in its AI development, rather Americans should be asking their very own government what it plans since it too is now very transparently promoting AI and (unlike the Chinese) even going so far as to promote Transhumanism with the promotion of Elon Musk. With the American track record thus far in its inability to refrain from using force on all levels, why are Americans not asking how their government plans to incorporate these technological advancements that can either be used to service a boom in the productive industrial sector or for oppression and invoking caste systems. Why are the Americans seemingly so sure that they have nothing to worry from their own quarter?
“China’s plans, resources, and progress should concern all Americans.
We take seriously China’s ambition to surpass the United States as the world’s AI leader within a decade.”
Eric Schmidt March 2021
At the time of this quote Eric Schmidt was the Chairman of the US National Security Commission on AI (and was a chief executive officer of Google from 2001 to 2011 and its executive chairman from 2011 to 2015.)
No problem here with compromised interests right? As so many American politicians who also serve in corporations while simultaneously holding political positions.
Is Google’s vision for the future, IBM’s, Microsoft’s etc. vision for the future a representation of the American government’s vision? Is there not something incredibly concerning in the fact that this overlap is occurring? Would we not question this as being seriously compromised if it were occurring in China, which it is not? Why are Americans constantly looking at others to blame? When will they take responsibility for what policies and actions their government is actually executing?
In the US you see Google, IBM and Microsoft and they’re really the big AI houses but industry wise you see China going much deeper and much faster.
China’s growth in these industries through a decentralized strategy is actually threatening these big AI houses’ centralised control, not the American people.
Such so-called “patriots” as Steve Bannon have come out with a strong support for Elon Musk’s growing role in the Make America Great Movement. As anti-China foment rises in the US over the fear of China as a techno-feudal monster that threatens to dominate the world like the Borg, we in the west remain consistently blind to the fact that China has increased the standard and quality of living of its citizens and life expectancy which now exceeds that in the US. China has invested in all areas of industrial development in its society while the US focuses on the military industrial complex.
And it is now the US who has become a loud proponent for the cause of transhumanism within the MAGA movement. Why are Americans so concerned for what they think China might do, while the very thing is growing inside their own country? Do American citizens think they will be the only ones to benefit from their own transhumanist agenda? And if so, why are they not the very Borg threat they have been obsessing over?
Has the US become the very monster that it claims to have been searching for all this time overseas?
The question remains, will Americans be so foolish as to support going to war against China to benefit a transhumanist techno feudalist agenda and thus ensure their global supremacy?
Cynthia Chung is the President of the Rising Tide Foundation and author of the books “The Shaping of a World Religion” & “The Empire on Which the Black Sun Never Set,” consider supporting her work by making a donation and subscribing to her substack page Through A Glass Darkly.
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A great article, Cynthia. You always excel with a deep dive into subjects. A lot of work. The video of the Chinese grade 5 boy is gold. Thanks.
Thank you for that clear explanation of the chip wars. And also for educating us (and Trump) on the correct use of a McKinley tariff.
But now I’m left wondering why our young scholars wish to start a company like Blackrock, State Street or Vanguard, instead of wanting to start a company like SMIC, Samsung, or TSMC. We obviously need a change.
Thank you for pointing us in the right direction for that change.
Priceless.