Authored by Peter Tchir via Academy Securities,
With weakness in chips and AI the prior week, that was a major topic of conversation, as was the escalation in Iran (please see Academy’s Geopolitical Analysis for the latest on Iran and geopolitics more broadly).
Two key themes from last weekend’s From Trinkets to Compute seem to be playing out:
Cheap Chinese Compute
Most importantly, the story of Cheap Chinese Compute is garnering staying power. While DeepSeek may have been a one-off, the story is increasingly about China delivering Cheap Compute. We have seen China flood/control markets in the past. I didn’t see it coming in compute (at least not yet), but it might be here?
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China doesn’t have to deal with NIMBY, but they do make a lot of chips (generally lower quality, but a lot), and have been ramping up all forms of electricity production and storage for years. The U.S. is finally getting on board with this ProSec™ theme, while the rest of the world is only starting to wake up to the need and potential opportunity that adopting a ProSec™ mindset delivers.
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On the less “savory” side are “allegations” (and I’m being polite here) that a lot of the Chinese compute trains by “distilling” from ex
