150-plus Silicon Valley companies have sent a letter to the US government urging not to shut Chinese AI models; warn: Hundreds of American companies will instantly die
Nearly 200 Silicon Valley companies, Proton and Y Combinator among them, have written to the Trump administration asking it not to cut off American access to Chinese open-weight AI models. The letters went out Wednesday from the newly formed Little Tech Association, addressed to President Donald Trump, Commerce Secretary Howard Lutnick, and Office of Science and Technology Policy Director Michael Kratsios. It is the first time the wider startup community has organised itself around this fight, and the timing is not accidental.The trigger was Moonshot AI’s Kimi K3, a 2.8 trillion-parameter open-weight model that landed last week and immediately dragged chip stocks down with it. Reports that Washington was weighing a ban on Chinese models followed within days. For founders who build on those models because they cannot afford to spend heavily on credits from Anthropic or OpenAI, the prospect reads less like national security policy and more like an extinction event.
Startup founders say a Chinese AI ban would hand the market to Anthropic and OpenAI
Suhail Doshi, founder of AI infrastructure startup Particle and a member of the association, put it without decoration. “There’ll be hundreds of companies that instantly die,” he told POLITICO. “It’s great for Anthropic. We’re all going to have to spend money on Anthropic.”That is the core of the argument. The letter says American leadership needs two things at once: world-leading US open-weight models, and continued access for American builders to open models already circulating globally. Blocking downloads, the founders write, would not slow the spread of Chinese models anywhere else in the world. It would only make US startups poorer and slower.Little Tech Association Executive Director Harry Godfrey wants targeted safeguards rather than blanket prohibitions. “A scalpel rather than a sledgehammer,” he said, adding that the question policymakers should be asking is which approach addresses real security concerns without raising costs or limiting access.
White House escalates rhetoric on Moonshot AI even as blanket ban talk cools
The administration is not committing either way in public. White House spokesperson Liz Huston said the US leads the world in AI innovation and Trump intends to keep it that way. A White House official, speaking anonymously, was blunter about the leaks: any policy announcement will come directly from the administration, and everything until then is speculation.Senior White House and Cabinet members did discuss the matter Monday night, according to two people familiar with those conversations. But a blanket ban was reportedly never seriously on the table. As of Wednesday, the Commerce Department had not drafted plans to add Chinese AI companies to its Entity List.The rhetoric has kept escalating regardless. Treasury Secretary Scott Bessent said Tuesday that the US could sanction Chinese firms found to have improperly distilled American models, citing watermarks from American systems turning up inside Chinese ones. Kratsios went further on Wednesday, alleging Moonshot distilled Anthropic’s Fable model while building K3 using a purpose-built internal platform designed to evade detection, and that it acquired Nvidia GB300 servers despite a ban on their sale to Chinese entities. Moonshot has said nothing publicly.
Open-weight AI models expose a growing split between US labs and startups
Kratsios was careful to say the administration supports open-source frameworks and open-weight models, drawing a line between ordinary distillation and industrial-scale theft. But the fight underneath is about who gets to build.Anthropic has spent months pushing for tighter restrictions on Chinese developers on security grounds. The startups signing this letter say restrictions do nothing to stop proliferation abroad and everything to raise costs at home. Kimi K3’s full weights go up on July 27, free to download and modify. Whatever Washington decides after that, it will be deciding late.
