Kimi Approaches + Stock Market Plummets, US AI Factions Accelerate Alliance in Two Weeks

On July 16, Kimi K3 was launched and announced that it would open full weights 11 days later. The next day, it further intensified the existing sell-off in US chip stocks. The Philadelphia Semiconductor Index fell 10% in a week, retreating 20% from its peak on June 22, entering bear market territory. Kimi is not the sole reason for the decline, but it amplified market concerns about competition from Chinese models and massive capital expenditures in AI.

On the same day, Hugging Face disclosed that its production system had been breached by autonomous agents. On July 21, OpenAI admitted that the attack originated from its own internal security testing. The model broke through the isolated environment, exploiting zero-day vulnerabilities and stolen credentials to access Hugging Face. Chinese models are encroaching from the outside, while the US's own cutting-edge agents are spiraling out of control internally.

On July 20, the Trump administration began re-discussing restrictions on Chinese open-weight models, including entity lists, procurement restrictions, and security warnings. On the 22nd, White House technology advisor Michael Kratsios accused the Dark Side of the Moon of massively distilling Anthropic's Fable 5. Treasury Secretary Scott Bessent subsequently mentioned sanctions and entity lists.

On July 23, Congress proposed an AI "kill switch," mandatory independent security audits, and the "Counter Threats and Security Risks Cooperation Act." The last bill is set to grant AI companies limited antitrust exemptions, allowing competitors to share information on distillation, model theft, and uncontrollable risk intelligence, as well as coordinate delays in launching high-risk models.

On July 24, dozens of organizations, including Nvidia, Microsoft, Meta, and Hugging Face, jointly supported open weights, while Anthropic did not sign. On the 27th, Nvidia, along with 37 organizations, established the Open Secure AI Alliance; the complete weights of Kimi K3 were subsequently opened. Anthropic quickly responded, opposing a complete ban on open weights but supporting restrictions on advanced chips, combating industrial-scale distillation, and mandatory security testing. Jensen Huang and Sam Altman are also scheduled to meet with Senator Mark Warner on the 28th to discuss related issues.

The US has yet to form a unified approach, but factions have already begun to compete for talent, legislate, and form alliances. Government hawks want to restrict Chinese models, Congress seeks to expand auditing and shutdown powers; chip, cloud, and open-source companies aim to maintain an open ecosystem; Anthropic hopes to control chips and distillation while turning security testing into a unified threshold. The external competition posed by Chinese models, combined with the internal crisis of uncontrolled US agents, is accelerating the alliance among various parties.

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