Ben Buchanan

We were heartened when their CEO said, I think that the biggest impediment to what DeepSeek was doing was not their inability to get money or talent, but their inability to get advanced chips. Clearly, they still did get some chips that they some they bought legally, some they smuggled. So it seems.

We were heartened when their CEO said, I think that the biggest impediment to what DeepSeek was doing was not their inability to get money or talent, but their inability to get advanced chips. Clearly, they still did get some chips that they some they bought legally, some they smuggled. So it seems.

And then in December of 24, they came out with a system called version three DeepSeek version three, which actually I think is one that should have gotten the attention. It didn't get a ton of attention, but it did show they were making strong algorithmic progress and basically making systems more efficient. And then in January of 25, they came out with a system called R1.

And then in December of 24, they came out with a system called version three DeepSeek version three, which actually I think is one that should have gotten the attention. It didn't get a ton of attention, but it did show they were making strong algorithmic progress and basically making systems more efficient. And then in January of 25, they came out with a system called R1.

R1 is actually not that unusual. No one would expect that to take a lot of computing power just as a reasoning system that extends the underlying V3 system. That's a lot of nerd speak. The key thing here is when you look at what DeepSeek has done, I don't think the media hype around it was warranted. And I don't think it changes the fundamental analysis of what we were doing.

R1 is actually not that unusual. No one would expect that to take a lot of computing power just as a reasoning system that extends the underlying V3 system. That's a lot of nerd speak. The key thing here is when you look at what DeepSeek has done, I don't think the media hype around it was warranted. And I don't think it changes the fundamental analysis of what we were doing.

They still are constrained by computing power. We should tighten the screws and continue to constrain them. They're smart. Their algorithms are getting better. But so are the algorithms of U.S. companies. And this, I think, should be a reminder that the chip controls are important. China is a worthy competitor here. And we shouldn't take anything for granted.

They still are constrained by computing power. We should tighten the screws and continue to constrain them. They're smart. Their algorithms are getting better. But so are the algorithms of U.S. companies. And this, I think, should be a reminder that the chip controls are important. China is a worthy competitor here. And we shouldn't take anything for granted.

But I don't think this is a time to say the sky is falling or the fundamental scaling laws have broken. Where do you think they got their performance increases from? They have smart people. There's no doubt about that. We read their papers. They're smart people who are doing exactly the same kind of algorithmic efficiency work that companies like Google and Anthropic and OpenAI are doing.

But I don't think this is a time to say the sky is falling or the fundamental scaling laws have broken. Where do you think they got their performance increases from? They have smart people. There's no doubt about that. We read their papers. They're smart people who are doing exactly the same kind of algorithmic efficiency work that companies like Google and Anthropic and OpenAI are doing.

I think two things are true here. The first is there will always be a frontier, or at least for the foreseeable future, there'll be a frontier that is computationally and energy intensive. And our companies, we want to be at that frontier. Those companies have very strong incentive to look for efficiencies and they all do.

I think two things are true here. The first is there will always be a frontier, or at least for the foreseeable future, there'll be a frontier that is computationally and energy intensive. And our companies, we want to be at that frontier. Those companies have very strong incentive to look for efficiencies and they all do.

They all want to get every single last juice of insight from each squeeze of computation, but they will continue to need to push the frontier. And then in addition to that, there'll be a kind of slower diffusion that lags the frontier, where algorithms get more efficient, fewer computer chips are required, less energy is required. We need, as America, to win both those competitions.

They all want to get every single last juice of insight from each squeeze of computation, but they will continue to need to push the frontier. And then in addition to that, there'll be a kind of slower diffusion that lags the frontier, where algorithms get more efficient, fewer computer chips are required, less energy is required. We need, as America, to win both those competitions.

Every AI chip, every advanced AI chip that gets made will get sold. The market for these chips is extraordinary right now, I think, for the foreseeable future. So I think our view was we put the export controls on.

Every AI chip, every advanced AI chip that gets made will get sold. The market for these chips is extraordinary right now, I think, for the foreseeable future. So I think our view was we put the export controls on.

We put the export controls on the first ones in October 2022. NVIDIA stock has 10x'd since then.

We put the export controls on the first ones in October 2022. NVIDIA stock has 10x'd since then.

Sure. I think the dynamic is right. I'm not suggesting they're, you know, if they had a bigger market, they could charge on the margins more. That's obviously the supply and demand here. I think our analysis was considering the importance of these chips and the AI systems they make to U.S. national security. This is a trade-off that's worth it.

Sure. I think the dynamic is right. I'm not suggesting they're, you know, if they had a bigger market, they could charge on the margins more. That's obviously the supply and demand here. I think our analysis was considering the importance of these chips and the AI systems they make to U.S. national security. This is a trade-off that's worth it.