The Drivers for 2026
January 14, 2026
The new year is here. Decrypt.co runs down the high and lows in, “Emerge’s 2025 Story of the Year: How the AI Race Fractured the Global Tech Order.” The main events of 2025 revolve around China and the US battling for dominance over the AI market. With only $256,000, the young Chinese startup Deepseek claimed it trained an AI model that matched OpenAI. OpenAI spent over a hundred million to arrive at the same result.
After Deepseek hit the Apple app store, Nvidia lost $600 billion in revenue as the largest drop in market history. Nvidia’s China market share fell from 95% to zero. The Chinese government banned all foreign AI chips from its datacenters, then the US Pentagon signed $10 billion in AI defense contracts.
China and the US are now warring a cold technology war. Deepseek exposed the US’s belief that controlling advanced chips would hinder China. Here’s how the US responded:
“The AI market entered panic mode. Stocks tanked, politicians started polishing their patriotic speeches, analysis exposed the intricacies of what could end up in a bubble, and enthusiasts mocked American models that cost orders of magnitude more than the Chinese counterparts, which were free, cheap and required a fraction of the money and resources to train.
Washington’s response was swift and punishing. The Trump administration expanded export controls throughout the year, banning even downgraded chips designed specifically for the Chinese market. By April, Trump restricted Nvidia from shipping its H20 chips.”
Meanwhile China retaliated:
“The tit-for-tat escalated into full decoupling. A new China’s directive issued in September banned Nvidia, AMD, and Intel chips from any data center receiving government money—a market worth over $100 billion since 2021. Jensen Huang revealed the company’s market share in China had hit "zero, compared to 95% in 2022.”
The US lost a big market for chips and China’s chip manufacturers increased domestic production by 40%. The US then implemented tariffs, then China responded by exerting its control over the physical elements needed to make technology in the strictest rare earth export controls ever. China wants to hit US defenses hard.
The Pentagon then invested in MP Materials with a cool $400 million. Trump also signed the Genesis Mission executive order, a Department of Energy-led AI initiative that the Trump administration compared to the Manhattan Project. Then China did…etc, etc.
Net net: Hype and hostility are the fuels for the months ahead. Hey, that’s positive Decrypt.
Whitney Grace, January 14, 2026
Comments
Got something to say?
-
- Subscribe to Beyond Search
Feature archive
News archive
-
