Analyst predicts China AI consolidation: DeepSeek talent drain leads to 'two big, two small' endgame
teortaxesTex · x · 2026-11-07
teortaxesTex lays out a long-term prediction for China's AI industry: DeepSeek's healthy financials, guaranteed compute sufficiency, streak of strong papers, unique culture, and strong team will drain talent from smaller labs, which it will then outcompete for marginal compute.
He expects the market to converge to Liang Wenfeng's "two big, two small" stable state where all players remain long-term viable: DeepSeek ("the whale") has secured a "small" slot, Alibaba won't give up a "big" slot, and the other two spots are undecided.
He notes that without compute constraints China could sustain more AI players than the US like in every other industry — talent supply and "sovereign stack" incentives already give it numerical advantages, but compute can't support the scale. He adds that Chinese companies' "cockroach-like" persistence past any benefit to stakeholders is bad business and ill-suited for AGI R&D.
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