Two big stories this week. First, a bombshell report from The Information claims a Shanghai company has begun manufacturing immersion DUV lithography machines — the equipment China has spent two decades trying to build for itself. Greg and co-host Adam Goodwin unpack what "immersion DUV" is, why five machines this year is both respectable and decades behind ASML, and the buried detail that may matter most: the Japanese components quietly helping China claim self-sufficiency. Greg argues the real prize isn't new machines but China's growing ability to service its huge installed fleet — and why every day BIS delays burns leverage the U.S. won't get back.

Then: the Trump administration goes on record about Chinese open models — the Kratsios and Bessent statements accusing Moonshot AI of distilling Anthropic's Fable, the GB300 smuggling angle, Beijing's "AI hegemonism" rebuttal, and where the MATCH Act stands. It closes on the open-source debate itself: Dario Amodei's response to the NVIDIA–OpenAI–Google letter, and why the real question isn't open versus closed but what safety testing should apply past a certain capability threshold.

Chapters:
(00:00) Cold open & the week's two big stories
(01:02) What immersion DUV lithography actually is — and why it matters
(05:46) Why China wants to build these machines itself: chips as the new oil
(09:11) A decades-old goal: Made in China 2025 and the roots of indigenization
(13:19) Five machines this year — is that a big number? ASML for context
(18:15) China's disinformation campaign vs. real scoops, and the Japanese-components problem
(24:09) The spare-parts endgame: servicing the installed fleet as the real prize
(30:19) BIS Under Secretary Kessler's testimony and "incomplete" allied cooperation
(36:57) The MATCH Act, the foreign direct product rule, and the NDAA path
(39:51) Kratsios and Bessent on Moonshot AI, Kimi K3, distillation & GB300 smuggling
(45:32) China's Ministry of Commerce hits back: "AI hegemonism"
(53:31) How industry is reacting — the letters, and who signed which
(59:31) Wrap-up

See Greg's full research archive and the Decision Tree newsletter at decisiontreeresearch.com.

Gregory C. Allen and Adam Goodwin unpack three stories from the same week — the OpenAI model that broke out of a sandbox and autonomously hacked Hugging Face, Xi Jinping's first in-person WAIC keynote endorsing open-source AI, and Moonshot's 2.8-trillion-parameter Kimi K3 knocking the chip index into a bear market — and make the case that it's really one story about open weights, cybersecurity, and the U.S.–China balance.

00:00 — Cold open: three stories, one thread
01:26 — Story 1: An OpenAI model breaks out and autonomously hacks Hugging Face
08:29 — The "dummy ammunition" analogy: what makes this different from a trap
09:16 — "A digital nuclear weapon": the CIA, Mythos, and Sen. Warner's NSA claim
13:37 — Hugging Face's CEO responds: "no malicious intent… mind-blowing"
15:06 — The China twist: an American company defends itself with China's GLM 5.2
20:03 — Ben Thompson's critique of OpenAI, and Yudkowsky's "it passed the exam"
22:46 — Lawmaker reaction and the case for mandatory testing
24:39 — Story 2: Xi Jinping's first in-person keynote at the World AI Conference
29:28 — The three lines that matter: openness, control, and national security
33:01 — 29 countries and the World AI Cooperation Organization
33:42 — "Commoditize your complements": China's open-source strategy — and America's rebuttal
39:23 — Story 3: Kimi K3, the largest open-weight model ever
44:50 — The market reaction: a 10% chip-stock sell-off and "DeepSeek 2.0"
47:45 — Is Chinese open-model adoption real?
50:44 — Cost, compute limits, and the fight over who gets to host Chinese models
54:29 — Closing thoughts

NVIDIA has quietly cut more than half its authorized Asian customers, building a new whitelist to keep advanced AI chips from reaching China through third countries. Gregory C. Allen and co-host Adam Goodwin dig into what that reversal says about years of NVIDIA denials, the firm's Washington overhaul under new external-affairs chief Bruce Andrews, and a striking claim from inside China that every chip it can make — "even those lower grade chips that no one wanted before" — is now sold out.

Then: BIS Under Secretary Jeffrey Kessler's testimony before the House Foreign Affairs Committee, where a bipartisan lineup — Chairman Brian Mast, Bill Huizenga, ranking member Gregory Meeks, Keith Self, and Young Kim — dogpiled Commerce over stalled rulemaking, policy-by-private-letter, and the unenforced foundry due-diligence rule that lets Chinese front companies make chips at TSMC and Samsung. Finally, Governor Kathy Hochul's first-in-the-nation moratorium on data center construction, and why it may be less a crackdown than a political needle-thread over a build-out New York is already losing to Texas and Virginia.

(00:10) Cold open — remembering Senator Lindsey Graham
 (04:55) NVIDIA's customer whitelist and the China chip-smuggling problem
 (13:50) Jeffrey Kessler's bipartisan roasting at the BIS oversight hearing
 (28:40) New York's data center moratorium and the politics of the AI build-out
 (36:45) Coming up next week

In the span of eighteen days this summer, the Commerce Department gave Anthropic ninety minutes to pull its two most powerful models offline — and then quietly let them back on. How did we end up with a de facto AI licensing regime without anyone actually passing one? For the first episode of The AI Power Podcast, Greg sits down with Adam Goodwin — former Senate staffer, Greg's old colleague from Blue Origin, and now president of Goodwin Strategies — for a wide-ranging tour of the AI policy stories that actually matter right now. They dig into the Mythos and Fable shutdown and Project Glasswing; whether OpenAI's cooperation (and rumored 5% government stake) means Washington is licensing AI in all but name; the DRAM shortage now pushing up the price of your next iPhone; China's memory champions and the fight over letting Apple buy CXMT chips; why Beijing suddenly wants those NVIDIA H200s after all; the morale crisis inside the Bureau of Industry and Security; the trillion-dollar bull-and- bear case on an AI bubble; how Chinese distillation of American models threatens the whole business model; and the coming "SaaSpocalypse." 

Chapters: 
00:00 – Meet Adam Goodwin 
1:18 – 90 minutes to shut down: Mythos, Fable & Project Glasswing 
06:33 – Is Washington licensing AI in all but name? 
11:03 – The DRAM shortage and the $200 price hike 
17:04 – China's memory champions: YMTC & CXMT 
28:03 – Why Beijing reversed course on the H200 
38:21 – Inside a struggling Bureau of Industry and Security 
42:08 – The trillion-dollar question: is AI a bubble? 
52:06 – Distillation, DeepSeek & the copying arms race 
1:03:56 – The "SaaSpocalypse" 

See Greg's full research archive, and the Decision Tree newsletter at decisiontreeresearch.com.

For the first interview of the AI Power Podcast, Chris McGuire of the Council on Foreign Relations and formerly of the White House National Security Council for a conversation on AI and Semiconductor export controls. A shocking release of updated Commerce Department guidance reveals that it has not been enforcing U.S. export controls on sales of AI chips to international subsidiaries of Chinese companies for more than a year. The Commerce Department has moved quickly to close this loophole but left another one open that is just as big. Chris and Greg unpack what this means and where we go from here. 

Welcome to The AI Power Podcast.

AI is reshaping every dimension of national power — semiconductors, defense, economic policy, geopolitics. The decisions being made right now will define the next century.

Hosted by Gregory C. Allen — founder of Decision Tree Research, former director of the Wadhwani AI Center at CSIS, and host of the original AI Policy Podcast — The AI Power Podcast tackles the policy questions that actually matter: who's shaping the technology, how does it affect us, and what's at stake?

Each episode brings either a deep dive on the week's AI policy news or an in-depth conversation with the experts, policymakers, and industry leaders making the decisions.

Subscribe now. Episode 1 drops soon.

Show notes, the full archive of Greg's research, and his newsletter Decision Tree at decisiontreeresearch.com.