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The Key Steps America Must Take to Win the AI Race



The U.S. tech industry was shaken this week by the performance of DeepSeek’s latest chatbot. This Chinese AI startup's creation not only matched leading AI models like OpenAI’s ChatGPT but also did so at a fraction of the cost and without relying on the most advanced chips. The immediate ripple effect saw nervous investors selling off stocks of U.S. tech companies, resulting in nearly $1 trillion in lost market value.


Marc Andreessen, a prominent American tech investor, called DeepSeek's latest chatbot an "AI Sputnik moment." This term alludes to the day when the former Soviet Union shocked the world by successfully launching the satellite Sputnik I into space, giving it an early lead in the space race against the United States.


While DeepSeek’s AI model performance is impressive, some of the company’s claims are questionable. For instance, DeepSeek asserted that it achieved remarkable performance using less advanced Nvidia chips due to U.S. government export controls that restrict companies like Nvidia from selling their most advanced chips. However, it is well known that these export controls have been ineffective, as there are reports of robust underground smuggling activities that enable Chinese tech firms like DeepSeek to obtain restricted Nvidia chips on the open market in China.


Additionally, DeepSeek claims that it costs only about $5.6 million to train its AI model, which is significantly cheaper than the $100 million to $1 billion typically spent by American companies. However, David Sacks, President Trump’s AI czar, accused DeepSeek of copying American company OpenAI by using a process called distillation to extract large volumes of data from OpenAI’s tools for its own technology development. OpenAI has since launched an investigation into these claims.


Even if DeepSeek's performance is not as groundbreaking as initially believed, the reality of the AI race between China and the U.S. remains stark. Chinese tech companies have proven to be formidable competitors, and this situation calls for the U.S. to take strategic steps to ensure we will win the AI race against China.

First, U.S. companies have a crucial responsibility to protect their products and technology, prioritizing long-term growth over short-term profit margins. Nvidia stands out as a vocal critic of the U.S. government's export controls on chips to China, actively lobbying for maximum market access due to the country's importance to its business. Last year, Nvidia generated more than $7 billion in revenue from China. The company claims that its chips sold in China are modified to comply with U.S. export regulations. However, experts contend that these China-specific chips match the performance of Nvidia's most advanced U.S. offerings, thereby undermining the effectiveness of the export controls.


Thus, it felt like a form of divine retribution for Nvidia's management when the company lost nearly $600 million in market value on Monday. Investors feared that Chinese AI company's innovation could lead to a decrease in demand for Nvidia's advanced chips worldwide.

For far too long, U.S. tech companies like Apple and Nvidia have eagerly shared their innovations with Chinese counterparts, all in the pursuit of fleeting market share and profits. This short-sighted approach has overlooked the significant risks involved. The rapid rise of DeepSeek should be a clear warning to the U.S. tech industry. Now is the time to recognize technology as the most valuable asset and take decisive steps to protect it, ensuring long-term competitiveness and profitability for the future.


Second, to truly empower American tech companies in the AI race, the U.S. government must refrain from enacting detrimental policies. The previous Biden administration has stifled the nation's AI advancement through its restrictive climate policies and an ineffective approach toward meritocracy. Given that AI development requires substantial energy, the Biden administration’s climate initiatives—including the cancellation of the Keystone XL pipeline—have severely limited the energy supply in the U.S., subsequently driving up energy costs.


Moreover, the Biden administration imposes 'diversity, equity, and inclusion' (DEI) mandates within the CHIPS Act , which was supposed to boost semiconductor research and manufacturing in the U.S. These DEI requirements prioritize the hiring from historically underrepresented community in the semiconductor workforce over selecting the most qualified candidates, leading to frustration among chip manufacturers. As a result, major companies like Intel and Taiwan Semiconductor have been compelled to halt the construction of chip factories in the U.S., illustrating the adverse consequences of this legislation.


However, there is hope. President Trump’s executive orders regarding energy and DEI promise to revitalize the U.S. energy sector and eliminate the burdens of DEI mandates. This shift would empower American tech companies with a robust supply of affordable energy for their AI data centers, allowing them to recruit the best talent in AI development without the limitations imposed by DEI policies.

Ultimately, success in the AI race hinges on our ability to attract and retain top talent. Last December, President Trump proposed to offer green cards (U.S. permanent residency) to international students who can significantly contribute to our nation after earning degrees from U.S. colleges and universities. During his first term, he sought to overhaul U.S. legal immigration, shifting from prioritizing family reunification to prioritizing skilled immigrants essential for our economy. Unfortunately, this proposal was swiftly dismissed by the Democrat-led Congress.


Now, with Republicans controlling both the House and Senate, President Trump has the chance to revive his previous initiative and implement a skills-based immigration system. He rightly argued before that such a system is “pro-American, pro-immigrant, and pro-worker,” and essential for enhancing our global competitiveness.


In an era where AI has the potential to transform everything from healthcare to defense, winning the AI race against China has never been more critical. With our unparalleled American creativity, commitment to freedom, and sound government policies, we can lead this technological revolution.


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© 2016 by Helen Raleigh

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