Today’s briefing:
— Did China just close the AI gap?
— Houthis have joined the chat
— The delivery driver with a literary prize
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Your Insider’s briefing:
— Did China just close the AI gap?
— Houthis have joined the chat
— The delivery driver with a literary prize
Good morning {{first_name | Intriguer}}. Imagine this: there’s an 87-year-old problem in algebraic geometry that’s humiliated generations of mathematicians — called the Jacobian Conjecture, it basically states something like “polynomial maps with non-zero Jacobian are invertible”.
So an obscure 31-year-old researcher named Levent Alpöge is then watching Sunday night’s World Cup final and, with beer in one hand and phone in the other, gets the idea from a friend that maybe AI could solve that old problem.
He duly feeds it into an AI model and returns to the game but, before that final FIFA whistle even blows, AI has already delivered a crisp three-liner casually disproving the entire Conjecture. Levent tweets it out, and the math world gasps in shock.
I love this true tale because, while it’s easy to get lost in AI’s LinkedIn slop, egos, IPOs, and export controls, it’s a reminder that the underlying tech is genuinely powerful enough to solve a pre-war problem while we all watch football.
I feel hopeful about that. And as a bonus, we now get to live in a world where (ahem) polynomial maps with non-zero Jacobian are not necessarily invertible.
Anyway, keep it in mind as we explore why China’s latest AI model just shook the world.
 | Managing Editor Jeremy Dicker |
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Number of the day
$23K
That’s the size of the stock bonus that Dutch chip-machine pioneer ASML is now offering its workers if they stick around until 2030. What is this, a bonus structure for ants?!
Open-shut case.
Did your AI-obsessed friend suddenly switch from gushing over Anthropic’s Fable 5 to frothing at China’s new Kimmy? Or was it Kim K? Jimmy Kimmel?
We got you.
The tech world’s latest earthquake comes from a Beijing-based startup, Moonshot AI. That name is not just a nod to any ‘impossible mission’ vibes but also Pink Floyd’s legendary 1973 album (the firm’s Chinese name translates literally to The Dark Side of the Moon). To boot, the startup’s rock-mad founding trio (Yang, Zhou, and Wu) launched Moonshot on the album’s exact 50th anniversary.
So name trivia aside…. why so special?
First, this new Kimi K3 model is powerful, performing up there with Anthropic’s Fable 5 and OpenAI’s GPT5.6 Sol in many metrics, vaulting past not just China’s original AI earthquake (DeepSeek) or even the sequel (Z.ai) but also big US names like Google, Musk, and Meta.
Second, it’s efficient, pioneering new tricks to only use <2% of its massive brain (2.8 trillion parameters) at any one moment. That means it’s roughly half the cost of some top US models, despite matching or beating them on many tasks — like Cape Verde matching Argentina with half the players.
And third, it’s open-weight*, meaning (subject to a 27 July release) anyone can download the model’s trained underlying parameters (weights).
So Kimi K3 is not just powerful and efficient, but yours to (say) modify and tweak, rather than route constantly via your pricey tech overlords.
Now that hopefully gives a sense why the AI world has gone bonkers: Kimi K3 itself has already had to pause its subscriptions amid a flood of user demand, and is now prepping to ride the IPO wave within months.
As for everyone else…?
Shares in local rival Z.ai have just crashed 30% (!) in a week
US-based ‘EDA’ stocks (Cadence, Synopsys) are down 9% because Kimi K3 apparently designed real chips without having to rely on their pricey tools, and
US-based chip stocks (Nvidia, AMD) are down 5% amid investor worries that China’s open models could (again) reduce demand for high-end chips.
It’s all giving DeepSeek 2025 release energy, which brings us to our next question: China’s AI hype faded a little last year, so surely this year’s buzz will fade too..?
And sure, there are similarities in the way Wall Street is again now questioning America’s frontier pricing power + massive chip spend…
Last time, DeepSeek didn’t kill demand for premium US models and chips, which quickly re-established their dominance, all while…
Our world’s overall AI spending pie just kept growing faster than any single new product could disrupt (à la Jevons Paradox).
Plus there are familiar debates around Moonshot’s US dependencies:
Efficiency aside, Moonshot will still need top chips (though maybe more of the memory variety sold out of Korea), and…
US pioneer Anthropic already accused Moonshot (way back in Feb) of distilling top US models to train and improve Moonshot’s own versions.
There’s now a fierce and nerdy debate raging over that second point, given Kimi’s betters (Fable 5 and GPT 5.6) only appeared a few weeks earlier — not a lot of time to ctrl-c + ctrl-v everything, though others argue you only need a few well-chosen reasoning traces to effectively reverse-engineer.
The other factor is data, with lesser-known but critical firms like Mercor charging those US AI labs huge premiums for early dataset access to train their models, but then opening it all up to the rest at bargain-basement prices within weeks.
Still, details aside, the bigger picture is getting clearer — maybe DeepSeek was less a one-off, and more a pattern now stabilising via Moonshot: China can develop near-frontier AI at a fraction of the US cost, with America’s lead now measured in weeks.
Maybe that’s why President Xi just seemed so upbeat (by Marxist-Leninist standards at least?) at Shanghai’s World AI Conference — especially after 29 nations just agreed to form a new global AI cooperation body hosted in… Shanghai.
Intrigue’s Take
The basic principle at play here is brutally simple:…
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Intrigue’s Take
The basic principle at play here is brutally simple: China is saying sure, pay top dollar for America’s McLaren, or just buy our Lamborghini for the price of a Camry. The reality is most AI users only need a Lambo (if that), and only have the budget for a Camry (if that), so raw economic gravity then steps in and handles the rest: six of the ten most popular AI models are now China-based.
It’s against that backdrop that China’s playbook is becoming clearer: let the West incinerate historic piles of cash to dominate the AI frontier while China rides the slipstream to share its own open-weight models, capture developer mindshare, set the world’s de facto AI standards, and then let the resulting data flywheel accelerate China’s own AI progress closer to the frontier anyway.
As a bonus (not a core driver), China also gets to flip all this into geopolitical advantage, pitching itself as a friend of the Global South now going full Oprah on AI (you get an AI model!) while US labs stay pricey and shut. Just don’t ask about China’s travel bans on its own AI pioneers (not great for the whole ‘open’ brand).
But okay, then what options does the US have? DC already tried to block China’s access to America’s next top model (sorry) but everyone seems to agree the result was a mess, both in signal and effect.
There are now rumours the US might instead switch to block America’s access to China’s open models, presumably hoping quality, safety, and legal fears push cashed-up US customers to keep paying that sweet sweet premium — but that feels just as messy and futile. In fact, the whole notion of restricting model access increasingly feels like trying to cancel gravity after everyone already jumped.
So longer term? Maybe model pricing gets squeezed, pushing value out towards both hardware (where the US still has leverage) and end-application (where China leads, but relatively moat-free). In that world, others will avoid picking a side, instead mixing and matching as their needs and budgets dictate.
If that AI future feels a teensy bit multipolar, that’s probably because it is.
Sound even smarter:
*Sticking with car analogies for AI…
Open-weight (Kimi K3) basically means you own the car
Closed-model (many big US names) means you just rent it, and
Open-source (Meta’s Llama) means you own the car and blueprints and factory tools.
But how do open models make money? The details differ, but they basically hope to win market share, then profit from the broader ecosystem that emerges.
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Meanwhile, elsewhere…
🇸🇦 SAUDI ARABIA — Red Sea target.
Amid another escalation in the Iran war, the Saudis are now voicing outrage after Yemen’s Iran-aligned Houthis declared an immediate “maritime embargo” on Saudi ports, potentially closing a major Hormuz bypass that typically supplies 5% of the world’s oil via the Red Sea. (Bloomberg $)
Comment: The Houthis haven’t actually pulled the trigger yet, but they’ve hit enough tankers over the years for captains to know it’s no bluff. A rival Saudi-backed faction in Yemen is now pledging it’ll protect shipping, but those guys can barely protect their own turf. Meanwhile, maybe the only surprise here is it took this long for the Houthis to get involved, in what increasingly risks spiralling into a broader regional war.
🇬🇧 UNITED KINGDOM — Burnham in, Miliband up.
Newly installed British leader Andy Burnham has unveiled both his team (Miliband as foreign secretary and Healey as chancellor) and priorities, including continued support for Ukraine’s self-defence, a domestic shift to cost-of-living relief, and rumours of more North Sea oil and gas. (Guardian)
🇳🇮 NICARAGUA — No more elections.
Long-time leftist dictator Daniel Ortega is dropping all pretence, announcing his country (due to vote next year) will never hold elections again. (CNN)
Comment: Nicaragua is basically now a family autocracy that stopped holding free elections years ago. But why drop the pretence, particularly with likeminded and nearby Cuba now under so much US pressure? It could be a reaction to a) a more assertive USA, b) a more distracted USA, and/or c) a further loss of support among local Nicaraguans.
🇹🇭 THAILAND — Raise the tank alarm.
The prime minister (Anutin) has objected to China’s Xi over Beijing’s recent delivery of 39 battle tanks to neighbouring Cambodia, warning the shipment could disrupt the fragile Thai-Cambodian truce. (Straits Times)
Comment: With China further dropping the pretence of neutrality here, we wonder whether Bangkok will lean more into its own long-running security ties with the US.
🇸🇱 SIERRA LEONE — Pipeline politics.
West-African regional bloc ECOWAS has used its Freetown summit to formally back a planned new $25B, 7,000km (4,350mi) gas pipeline connecting 13 nations via Morocco and out to buyers in Europe. (Punch)
Comment: This looks a lot to us like a dual message: first, a reminder to the bloc’s three absent juntas (Mali, Niger, and Burkina Faso) what they stand to lose. And second, to those backing the rival pipeline now getting built via Niger to Algeria: this new Atlantic route might be pricier, but still beats the security nightmare of a pipeline through the Sahel. A third signal comes from the regional power actually backing both projects: choose your pipeline, but Nigeria is the region’s indispensable power either way.
🇺🇦 UKRAINE — Command shuffle continues.
Ukraine’s military chief (Syrskyi) is now widely expected to get shafted amid word President Zelensky will bow to days of Kyiv protests to reinstate his popular young ex-defence minister (Fedorov) instead. The two security chiefs reportedly clashed over Fedorov’s tech-drive reforms. (Guardian)
Comment: Putin’s propagandists like to frame it all as more Ukrainian chaos, though it’s probably more a reminder that a) protest isn’t even allowed in Putin’s Russia, and b) he probably should’ve fired his own military chief (Gerasimov) after his big invasion first failed.
🇨🇦 CANADA — Tariff hardball.
Prime Minister Carney has flagged he stands ready to “intensify” ongoing trade talks with the US after the White House announced new 50% tariffs targeting a wide range of Canadian goods — think consumer items like wine, cheese, and hockey sticks (😲), through to industrial inputs like auto parts and cement. (CBC)
Comment: Trump is betting his 30-day implementation delay will compel Carney to compromise on long-running disputes like dairy and auto quotas. Beyond the Canada specifics, Trump’s new tariff tool is also revealing: by invoking s338 of the 1930 Tariff Act for the first time in history, he’s digging into old statutes to rebuild his court-hit tariff wall for leverage amid USMCA renegotiations.
Extra Intrigue
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Win of the day
That’s Wang Jibing, courtesy of the China Writers Association
Deep down we all have some version of the same dream: finish that novel, hit publish, watch it blow up, then absolutely stroll into the ambassador’s office and tell them exactly where they can shove that deputy road minister’s visit. Wait… just us?
Either way, the above food delivery driver (Wang Jibing) just got to live his own version of the dream, with a collection of poetry (Low Flight) winning one of China’s top literary honours, named after Lu Xun (perhaps modern China’s greatest writer).
No MFA or turtle-neck or beret or publisher connections. Just some beautiful snippets on gig-economy life inspired by years of chats with fellow drivers, like this: “Who says spreading your wings means flying high? Flying low is also flying.”
But plot twist: rather than quit, he’s still delivering orders, insisting he loves the vibe and it helps keep him fit. Love it. Like imagine your UberEats arriving and you answer the door only to find Margaret Atwood there with your chicken korma?
Today’s poll
Do you think open models are the future of AI?
Yesterday’s poll: Where do you now think this US-Iran war ends after this latest escalation?
🌮 TACO (32%)
🗳️ Regime change or capitulation (6%)
🤝 A negotiated off-ramp (17%)
❄️ Protracted low-intensity conflict (40%)
✍️ Other (write us!) (1%)
Your two cents:
❄️ R: “Trump can't politically afford a protracted conflict, but he won't get capitulation without an invasion, which he can't afford, either. A negotiated off-ramp has already proven impossible to achieve, so what else is there? Admitting it was all a mistake? Not likely!”
🤝 M.S: “Neither party can afford to capitulate. Trump's ego will keep him fighting. The mullahs don't want to lose control. The economy on both and pressure from their respective allies will cause them to find the off-ramp.”