AI Overproduction

China is aiming to commoditize AI models. Expect a flood of open-source Chinese models — from computer vision to robotics — in the coming months.

Here’s the logic:

DeepSeek’s launch briefly erased ~$1T from US tech valuations.

-China excels at physical exports, not software.

-They win by mass-producing cheap alternatives until competitors collapse.

-DeepSeek’s success fueled national pride — they now see AI leadership as achievable.

-Its open-source model is spreading fast across China, from officials to startups.

-DeepSeek’s founder now meets with China’s top leadership — likely backed with unlimited support.

The goal? Undermine US tech, boost China's status, and strip software of margins — while selling AI hardware: drones, cars, smart homes, robot dogs.

In short: copy, optimize, scale, crush.

Will they win at the application layer? Unclear. But closed-source model devs will struggle to justify high training costs once strong open models flood the market.

Ironically, the Great Firewall nation is embracing open source — not out of principle, but out of strategy. Even the censorship in DeepSeek can be bypassed outside China. They care about control at home, not abroad.

Bottom line: China may now be advancing in software faster than the West is improving at hardware.

Why? Because China profits from AI-powered hardware, not software. Their apparent strategy: make AI models free, undercut Western companies, and dominate through scale — just like they did with manufacturing.