Washington is threatening to sanction Chinese AI models. Nvidia CEO Jensen Huang just told Axios something very different. In an exclusive interview in Fort Worth, Texas on July 21, Huang said US companies should be "absolutely" allowed to use open-source Chinese AI models. He went further: the odds that Chinese firms drive American companies out of business are zero.
Huang's answer was one word: "Absolutely." US firms should be allowed to use Chinese AI.
Huang's comments read like a direct warning to hawks in Washington pushing for a ban. The trigger was Moonshot AI's July 16 release of Kimi K3, a 2.8-trillion-parameter model and now the world's largest open-source system. Its aggressive pricing and upcoming open-weight downloads set off the sharpest wave of AI panic since DeepSeek rattled markets in early 2025. Kimi K3 beat Anthropic's Claude Opus 4.8 on multiple benchmarks, and chip stocks including Nvidia sold off on fears that cheaper, more efficient models would undercut the massive global bet on AI infrastructure.
The fallout came fast. US Treasury Secretary Bessent and Trade Representative Greer both spoke out the same day. Bessent told Fox Business that US authorities had found watermarks from American large language models embedded in several Chinese AI systems, calling it "unacceptable" and promising an investigation. Greer said Washington would examine whether China gained its edge through unfair means.
Bessent: “US watermarks found in Chinese AI models.” An investigation is coming
US media reported earlier that the White House is weighing a new executive order to restrict open-source AI, particularly systems from Chinese companies. The Commerce Department had already considered adding several Chinese AI labs to its Entity List last year.
Huang's logic cuts the other way. "The market misunderstood the impact of DeepSeek the first time," he told Axios, adding that Wall Street has "misunderstood the impact of Kimi again this time."
Kimi K3's launch rattled the entire AI industry.
Free, cheap open-source models, according to Huang, let AI reach far more consumers and businesses. That, he argued, drives strong demand for chips, data centers and computing power. "Free AI should be great for hardware," Huang said. "Free AI should be great for chips. Free AI should be great for data centers."
OpenAI and Anthropic have no reason to fear open models either, in Huang's view. Open-source systems expose more people to AI for the first time, which expands the whole market. Many of those users, he added, will still end up paying for the reliability and convenience of closed commercial services.
On security, Huang rejected the idea that downloading a Chinese model opens a backdoor to Beijing. Companies can fully customize and control access inside secure sandbox environments, he said.
Wong argued openness actually works the other way: outside researchers can inspect models, spot weaknesses and build defenses. "If everything just becomes one single model, one single point of attack, one single source of failure, I think the world is much, much more vulnerable."
Huang also called on Anthropic to open up its restricted cybersecurity model, Claude Mythos, rather than keep it locked down. "Holding Anthropic back is not in the benefit of the United States," he said, "Open models are available anyhow. So I think: Let Anthropic run."
On the US-China AI race, Huang staked out a position sharply at odds with Washington's. He rejected the idea that AI competition has a finish line. "We're going to continue to use AI forever," he said. "The United States is going to be here for a long time. China's going to be here for a long time."
Bloomberg cited several analysts drawing a contrast with the 2018 ban on Chinese 5G equipment. Freely downloadable, highly customizable software models have already embedded themselves deep in Silicon Valley's ecosystem. On OpenRouter, a platform offering access to multiple AI models, Chinese models now account for nearly 60% of token usage by US companies.
The adoption numbers back that up. DoorDash, Airbnb and Germany's Siemens have all shifted to Chinese models. More than 80% of US AI startups now make heavy use of Chinese models such as DeepSeek and Zhipu's GLM, with usage share holding above 30%, up from just 11% a year ago.
Nathan Lambert, an AI researcher at the University of California, Berkeley, put it bluntly: any form of ban would be a serious mistake for AI's long-term development.
Morgan Stanley believes the growth cycle in global AI computing demand is far from over. Bernstein estimates that even if Kimi K3 cuts single-run training costs by roughly 40%, competitive pressure pushing firms to double their training frequency could still lift total computing demand by around 20%.
Mao Paishou
** 博客文章文責自負,不代表本公司立場 **
Bloomberg reported on October 14 local time that the EU is negotiating with China. Brussels hopes Beijing will lift sanctions on the small German company Sindlhauser Materials GmbH. That small firm supplies the Dutch ASML, the world's most important chip equipment manufacturer. The sanctions now threaten its survival.
EU seeks China deal to free ASML supplier Sindlhauser.
The Deal on the Table
Bloomberg cited people in the know as saying the EU will remove trade restrictions on an unnamed Chinese company in exchange. That company is accused of assisting Russia in launching war against Ukraine.
In July this year, China imposed sanctions on Sindlhauser and 13 other European companies. The move retaliated for the EU's 21st round of sanctions against Russia. Sindlhauser is a small German company specializing in precision manufacturing and advanced coating technology for semiconductors and other industries.
In that round of sanctions, the EU listed several Chinese entities as sanctions targets. The EU said they were suspected of providing Russia with key components that could be used to manufacture weapons. Companies placed on the relevant EU and Chinese lists are subject to export controls.
People familiar with the matter said Sindlhauser relies on Chinese supplies of rare earths and critical minerals. If China's sanctions continue, the company will face the risk of bankruptcy within the coming months. It was also said this German company is part of ASML's supply chain.
ASML, Dutch semiconductor equipment giant.
Berlin and Brussels Race to Rescue Sindlhauser
Bloomberg sees a message in China's choice of target. Imposing controls on such an obscure company, the report argues, shows China knows exactly where Europe's economic bottlenecks sit.
An EU official says the European Union has begun discussions with China on whether each side would remove the entities from its own list. That means China's export control framework on one side, and the entities the EU has listed under its own regulations on the other.
The official added that any removal decision on the EU side would require unanimous support from all member states.
The trouble began in July when China's Ministry of Commerce put Sindlhauser on its export control list, and the company's first reaction was panic.
For weeks after the announcement, Sindlhauser had no clear view of whether, or how, it could keep operating.
Help came quickly. According to the people who knows what’s happening, the German government and the Bavarian state government, where Sindlhauser is headquartered, stepped in immediately to help the company find alternative suppliers wherever possible.
The two governments also explored other workarounds, such as recycling existing materials and seeking whatever financial support was available.
Brussels was watching too. Some officials there understood the company's plight and raised the matter with the Chinese side for several weeks.
Sindlhauser's rare earth supply nearly all Chinese.
A Policy Dilemma, an Intelligence Blind Spot
Sindlhauser sits squarely inside China's rare earth grip. According to the report, the company relies almost entirely on Chinese rare earths, and its placement on the export control list dealt a direct blow to its supply chain.
The company had previously taken almost no measures to diversify its supply sources or reduce its dependence on Chinese raw materials.
Some officials see a problem with the rescue. Removing companies such as Sindlhauser from the sanctions list, they worry, could once again weaken the urgency for these European companies to build supply chain networks outside China.
That leaves the German government and EU officials in a bind. Deciding through negotiations which companies go onto or come off trade restriction lists could set a bad precedent for other companies also hoping for sanctions exemptions. It would also mean the EU must make concessions on the question of certain Chinese entities.
But officials involved in handling the matter see a deeper problem. The situation behind the case, they argue, is more concerning, though not surprising.
The explanation: over the past year and a half, China has been collecting information on global supply chains as much as it possibly can. That is how China identified a small company in Bavaria as a supplier to the world's most important chip equipment manufacturer.
Beijing's map of global supply chains runs remarkably deep. The report credits that insight to the licensing system China has built for exports of critical minerals and rare earths.
The system requires foreign companies to submit detailed information, including their customers, how and where Chinese raw materials are used, and photos of the final products.
Germany shows the cost. Some companies have been leaking business secrets to China, while the German government remained completely unaware and unable to obtain the same or even similar information.
More important, the German government still has not formulated any strategy to address its shortcomings in economic intelligence.
A Possible Template, and China's Stated Position
The talks went straight to the top. According to the report, EU Trade Commissioner Maroš Šefčovič visited Beijing last week and met with Chinese Commerce Minister Wang Wentao. The two sides discussed lifting restrictions on Sindlhauser in exchange for relief for a Chinese company.
EU trade chief Šefčovič met Wang Wentao in Beijing.
The backdrop is stark. The EU is hunting for a fix to a massive trade deficit that exceeds $1 billion every single day.
People familiar with the matter say the two sides agreed in Beijing to strengthen information sharing and to give each other advance notice of export restriction measures.
The "one-for-one" arrangement around Sindlhauser, in which each side takes the other's company off its restriction list, could become a template for similar moves in the future. The EU is expected to act first. Only then would China lift its restrictions on the German company.
China's message has stayed consistent. The Chinese side has repeatedly stressed that China holds an objective and impartial position on the Ukraine crisis, stays committed to promoting peace talks, and plays a constructive role in advancing a political resolution of the crisis.
The opposition is just as firm. China firmly rejects the EU's blame-shifting, smears and denigration over the Ukraine crisis. It equally and firmly opposes the EU's unjustified listing and sanctions against Chinese companies and citizens.
