They don't need to profit when they have a government backstop and a nationstate strategy in place. China beating America in AI isn't just about who gets to generate the images/videos of cats.

They don’t have the government as backstop, deepseek is a very successful quant and benefits from less extraction on power and GPUs just like american companies benefit from fossil subsidies

I wonder if there's a "commoditize your complement" play in there somewhere.

Having the software stack get dirt-cheap and multi-vendor is good for hardware players. I'd argue there's even huge value in developing tooling that's less nVidia-centric for the health of the overall market, and the fact China is filled with other hardware manufacturers that want a bite at that margin and insatiable demand.

Are you saying that china is releasing great open weights model because they want to get into the GPU business? Which institution do you imagine is coordinating this?