China Considers AI Export Controls, SK Hynix Eyes $28B IPO, Banks Target Payment Business | Diet TBPN

0:00John Coogan:The big news of the day is that China has taken a page out of Washington's playbook, potentially, and aiming to limit the export of AI models. Now, these are just meetings at this point, but Chinese authorities have reportedly, this is according to Reuters, held meetings with some of the country's top tech firms. That's Alibaba, ByteDance, Z.ai, DeepSea, Kaiflyer, not mentioned yet, but you have to imagine that they'll be in the conversation if they aren't already. about potentially restricting overseas access to China's most advanced models. So they're thinking about doing the same thing that's happening with GPT 5.6, Sol, Ultra, Mythos, Fable, all these different models that are starting to get more restricted as they get more powerful.

0:44John Coogan:The government wants to say in what companies and what non-governmental organizations, what governmental organizations have access to them. So the discussions are still preliminary. When did, in AI 2027, did China wake up? Right around this time. Right around this time. Mid-2026. I actually have on my calendar, check on Jack Clark for today. Because last year, December 23rd, Jack Clark predicted that there would be big changes and acceleration in mid-2026. He said, so by summer of 2026, it will be as though the digital world is going through some kind of fast evolution with some parts of it emitting a huge amount of heat and light and moving with counterintuitive speed relative to everything else.

1:34John Coogan:Great fortunes will be won and lost here. And the powerful engines of our silicon creation will be put to work further accelerating this economy and further changing things. Do you think that's where we are? Is that an accurate assessment of mid-2026? When I saw this prediction, I put a calendar reminder for mid-2026. We're right in the middle of the year. And I wanted to check in and say, does it feel like this? Obviously, this is not a quantitative benchmark. This is a qualitative feeling. Fast evolution, emitting a huge amount of heat and light, moving with counterintuitive speed relative to everything else.

2:10John Coogan:Great fortunes certainly are being won and lost every day in the market. it. Tyler, how would you assess the amount of heat and light emitting from some parts of the digital world? Would you say it's huge? I would say it's huge. It's huge. It's kind of hard. Like, I feel like I've been like very tapped in for a long time. So it's hard to say like, you've been, you've been feeling. It's hard to see like an outside view is like, oh, is this actually like, has there been a big change like recently? Yes. So there's two things. Like one. It's been kind Kind of like a personal thing for you, being so tapped in.

2:43Would you say that?

2:44John Coogan:So there's, I mean, there's two things going on. One is that anyone who has. AGI has been like a personal thing for Tyler. He's been so tapped in for so long. No, it's true. So much of news coming out of DC of the past like two, three months has been about AI, which is like definitely was not true. Yes. You know, even earlier this year, I would say. Yes. And the, just the amount of heat and light around cybersecurity issues, the coding models, the agentic capabilities, the revenues that we would see in enterprise, those have not been a shock to AI insiders who have been tracking the capabilities of these models since last October, or even last summer, when models started, when Vibe coding was coined by Andre Karpathy, and coding became, you know, not solved, but, you know, greatly enhanced by artificial intelligence.

3:34Back to AI 2027, which was published April 3rd, 2025. By late 2026, they had, or sorry, mid-2026 was China Wakes Up. In China, the CCP is starting to feel the AGI. Export controls and lack of government support have left China under-resourced compared to the West. I'm going to fast forward a little bit. Hawks in the CCP warn that the growing race towards AGI can no longer be ignored. So they finally commit to the big AI push that they had previously tried to avoid. He sets in motion the nationalization of Chinese AI research, creating an information sharing mechanism for AI companies. So right now they're just looking at export controls.

4:17John Coogan:It feels like we're a little bit behind on this. It's possible the CCP is just reading this as a guide and just implementing it. They're just planning to implement it to a T. Thanks for the guide. Yeah, thanks for the playbook. You should have billed me for it. No, the real 4D chess here is to shame the CCP into not copying off of AI 2027, saying, oh, really? You're just doing the AI 2027 thing? Come on, you don't need to invest in AI. Don't be mimetic with our philosopher's literature and our most popular podcasts over here in America. Think of your own strategy. Come on, do whatever. No. So the discussions around AI export controls in China are still preliminary.

4:59John Coogan:And it isn't clear how Beijing could claw back access to models that they've already released. If they're on Hugging Face, you can download them. You can run them. And even if they had some sort of intellectual property, they could sue an open source inference provider for running Kimi or something like that. That feels really difficult to do from Beijing. But there are other implications. So once open weight models are posted publicly, of course, they can be copied, mirrored, downloaded, reused, anywhere fine-tuned. But there are several ways China could restrict future frontier models before they leave the country.

5:32John Coogan:At the latest end, Beijing could require companies to file future releases with regulators or submit them for national security review before publishing model weights. A more aggressive version would require government approval before any advanced model could be released overseas. And at the most restrictive end, China could simply ban the public release of frontier open-weight models. They could say no more open sourcing. Although the game theory there is a little odd because it feels like the fact that China has been open sourcing near frontier capabilities has been to China's benefit in general because it creates more disturbances.

6:08John Coogan:Like the deep seek moment was definitely good for China. Pricing pressure. Yeah, pricing pressure. So they could limit these to state-approved customers or Chinese government priorities, which at a certain level might just be the most important thing to do. The RSI loop, of course, you want all of the GPUs that you have focusing on advancing the frontier internally as opposed to sending it off to America. The talks come as the U.S. is also moving toward tighter control of frontier AI. The Trump administration recently restricted access to Anthropics, most advanced models, Fable 5 and Mythos 5, before later lifting some of those controls after additional safety mitigations.

6:45John Coogan:OpenAI has also reportedly faced government pressure around the rollout of its next frontier models. The issue has become more urgent because Chinese open-weight models are increasingly competitive. Z.AI's GLM 5.2 in particular recently impressed Silicon Valley by performing close to leading U.S. models at a much lower cost. The Quen family of models from Alibaba has also become one of the most important open model ecosystems in the world, while ByteDance's Daobao is one of China's most widely used domestic AI systems. I didn't know about that. If China places export controls on future frontier models, it could raise costs for American AI users and companies because it's obviously very beneficial to have a great open source model available to you and use them for lower stakes tasks while reserving expensive US frontier models for their most important workloads.

7:33John Coogan:If the best Chinese models are no longer freely available abroad, some of that cheap model supply disappears, but you have to ask what happens to meta. Do other labs start piling back into the open source ecosystem and more? Or will all the demand just go straight back to the frontier labs? It really sucks you in. That's the question. It really does. It really does. We should play some clips because Jeremy Brown, absolute terror. We need to be thinking about podcast safety because this is an addictive episode. There should be export controls on this. It should be only available to American citizens.

8:04John Coogan:Patrick should be doing it at NYC. one of the guys over there is Canadian. Yes, but maybe North America. Let's pull up a clip from this. I want to hear Jeremy chat about all sorts of things. They go all over. Where in the timeline is that? Well, should we talk about SK Hynix's new listing? Yes, we can run through that, and then we can pull up. SK Hynix is set to raise around$28 billion in a NASDAQ share sale this week, potentially one of the largest ever New York listings by an Asian company. The South Korean memory chip maker is already public in Seoul, where its stock is up more than 750 percent over the past year.

8:40But the U.S. listing gives American investors an easier way in. The story is big on the timeline because situational awareness, the hedge fund run by Leopold Oshenbrenner, may participate alongside Bally Gifford and Co2. Together, the firms could take as much as$7 billion of the deal. SK Hynix has become one of the purest AI infrastructure plays because it leads in HBM. has become a key NVIDIA partner and now has a market cap around$1.1 trillion.

9:09John Coogan:Which is like a quadrillion won. Yeah, it's a lot. When you look it up, it's very confusing, I think. It's a lot. The business is ripping. 2025 revenue grew 47 % to$63 billion. Profit more than doubled$28 billion in profit. Q1 revenue tripled year over year. But interestingly, the stock only trades 7x forward earnings because memory is brutally cyclical. And there's still a lot of people that are wondering what happens if there's another leg up in the AI demand and the AI build out. Will that mean more competitive pressure? Will it be a bottleneck where they do stagnate? How much can they actually grow?

9:46John Coogan:And so many investors that are just in memory have seen booms and busts from cloud or smartphone or crypto. And they say, like, I don't know that this one's going to last forever. I'm pattern matching to previous cycles, not thinking about this as a different technology. cycle. So I think that's what's going on with SK Hynix. But it should be a blockbuster IPO. Nevertheless, very interesting to see an Asian company listed in America. And most notable part of this deal is obviously situational awareness and their participation. They cover, invest like the best, the billion-dollar PDF, an idea that Jeremy and Patrick have talked about before.

10:27But situational awareness is turning out to be more of maybe a 10 or$100 billion dollar PDF.

10:32John Coogan:Yeah, seriously. The whole investing thesis built around that. It's just a PDF. I don't know. Is it an essay? A thesis? So if the PDF was worth a billion or more than that, what was the Dwarkesh episode worth? It's got to be some percentage of it, right? Yeah, definitely. Because a lot of people watch the podcast, watch the clips, scroll through the PDF. Breaking news. Meta unveils Muse Image, its first image generation model from MSL. Waiting for this. Let's pull up some images of this and see the results. It should be good, given that they have all the Instagram and Facebook data to train on.

11:07John Coogan:Alex Wang has a post. Cool. Let's pull this up. Okay, Muse Image, Muse Video, a whole bunch of very detailed badges printed all in one image. He says, releasing Muse Image today, the first image generation model from MSL. It is crazy that they didn't have any, back when it was fair, did they do anything with image? Because they had that amazing model segment anything, so they were doing work on images. And obviously they processed a ton of images. It pairs with MuseSpark to reason through your prompt, search the web, and plan before it generates. People get what they mean on the first try live now in the Meta AI app.

11:46John Coogan:Very, very fun. Even puts a realistic QR code in there and can do infographics and old Polaroids as well. Big Sur, August 1983. Three things Alex Wang is excited about. Under the hood, self-refinement. The model improves its own output within its chain of thought. Emerge during RL, not by design. Multi-reference composition. Many images blended into one coherent generation. Multi-turn editing. Iterate without losing coherence or starting over. Make an image of this person riding a bike, this bike, and wearing this suit while passing by these people on a park bench. Make it look like a drawing in this style.

12:28John Coogan:That's cool. So you can upload multiple images and sort of drop them in as various prompts. What you got, Tyler? Yes, so MetaFair did release a number of image models. So there was, I think it's pronounced Chameleon in 2023. There was Emu also 2023. And then there was another version of Chameleon. I think they were somewhat different than the Diffusion, which was popular at the time. I think they were all auto-aggressive. transformer which was like how you get the good tech stuff like that but um i believe this is a different uh that's cool yeah and uh alex is also previewing muse video competitive unprompted hereins visual fidelity temporal consistency also coming to meta ai this has got to be uh gpu intensive if they actually roll this out to everyone although meta ai does have a smaller install base than instagram but i mean imagine you really push this in meta ai and everyone's What do they buy all the GPUs for?

13:23John Coogan:You've got to get people generating stuff. I completely agree. I think put this in the hands of the modern Instagram creator. Let them have fun with it. And see, you already have the algorithm to filter the slop out. The stuff that is sloppy but still entertaining and creative will surface to the top. So congrats to them on a successful launch. And let's click over to Jeremy Giffon on why he doesn't worry about AI taking jobs. A very, very interesting take on the latest episode. I don't understand this idea of we're going to run out of jobs. To me, it's like very obvious that every, certainly every white collar job is like totally fake and made up in the sense that like they are not contingent for shelter and food and medicine and other necessities.

14:12but most jobs do not touch those or if they do they touch it in a very very derivative way what is your job as an allocator it's like well because capital is inherently inflationary you have to you can't just leave it alone and so like my job is like when you have money and you don't want it to go away you have to give it to someone and so you you give it to a bunch of people and then i take it and i put it into things that are productive and then hopefully you don't lose your money you get more money and like is this usual is this good yeah sure but like it's not real and to me there's like unlimited amounts of jobs that you can create in those sorts of scenarios we're gonna have unlimited wants and desires and and and our economy is solely driven by our unconscionable desire to consume things and so we're gonna come up with things to consume and now again in the short term and medium term that might be volatile and there might be a lot of jobs and etc and you know that's not good and uh you know there could be a lot of despair but in in the long run like we're just gonna invent new things to do like we've already solved all of our problems like the worry about oh we're not gonna have more jobs it just doesn't really resonate because i feel like we just make up stuff for us to do and that's sort of the whole point of it that makes me think we need an invest like the best soundtrack we do need to invest like

15:31John Coogan:the best soundtrack. Let's play the other clip that Patrick shared. The West Coast is definitely eating the East Coast. The founder is incredibly important and sort of the founding act is incredibly important in any business. I do think that it's notable that like the current paradigm in which we live, the largest and most important finance firms come out of a culture of leverage buyout, which it's extractive insofar as the primary goal is to make a thing more profitable. The core idea behind it is like using debt and financial engineering to make a lot of money in a way that the quality of the business itself is maybe ancillary to the core trade.

16:12Pause for a second. Afterglow says, my God, what an obnoxious soundboard. Unwatchable. Sorry.

16:21John Coogan:It was a little loud today. I feel like the soundboard's coming in a little bit hot. We're sorry about that. But we're having fun here. And, of course, we don't want to pirate the entire Invest Like the Best episode. We've got to tease it a little bit. This would be a good use case for AI if we can make a separate show that's just the show, but an agent in real time pulls out the sound effect and just has a normal show, no soundboard. Sure, sure. So you can choose whether you want the soundboard version of the show or the not. Tyler says, don't be sorry. That's why I'm here. Tyler's just here for the soundboard.

16:55So after that, unfortunately, there's people that are here that don't like the soundboard. There's people that are here only because of the soundboard. We are trying to find the middle ground, and we don't always get it right. We don't always get it right, but we're trying to.

17:07John Coogan:It's sort of a cold war between the pro soundboard and the anti-soundboard constituents in the audience. Well, revenge of the East Coast. The East Coast is trying to make a comeback. Jeremy Giffon says the West Coast is eating the East Coast, but the East Coast is trying to make a comeback across all of these big banks. Did you hear about this? They're going after the debit card rails. They're going after Visa. This is news today. J.P. Morgan, Bank of America, Wells Fargo, PNC, and other big banks are reportedly exploring a deal to buy a Fiserv debit card network that would let them own more of the payment rails that the customer's debit cards run on.

17:51John Coogan:So the basic idea is that post, I think it was post-financial crisis, there were limits on how much banks could make on debit card transactions. This is the Durbin Amendment. Durbin. The Durbin Amendment. I think Dick Durbin. And they want a way to turn debit back into a more valuable business. So Fiserv owns major debit networks, including Star and Excel, which I don't run into that often. I usually see Visa, MasterCard, Amex. I mean, Amex doesn't have debit networks. Star and Excel already connect to millions of cardholders and thousands of financial institutions. So this is like it's a real rail with an existing bank and merchant connectivity.

18:28John Coogan:And so this is like when Capital One bought Discover. They own the issuer. Then they also own the network. And then they can move their own volume onto their own rails and capture more of the economics. So who loses if this goes through? Who should be upset about this? It's probably the merchants, Visa, and MasterCard. So merchants would probably see higher effective debit costs if banks find a way to route more volume through bank-owned networks, while Visa and MasterCard would lose some leverage over U.S. debit. But the bigger story is that payments are getting vertically rebundled. Banks want the account, the card, the network, the wallet, the fraud layer, and eventually the AI agent checkout surface.

19:10John Coogan:So it's all very – I don't even think there's a real bid for Fiserv's debit networks just yet. But it's, like, starting to leave out that they're doing it. And I was interested to know, like, is this bullish for RAMP because they sit on top of networks? And I think it is generally positive because of the layer of abstraction they operate on. and I was wondering, like, is this an attack on Stripe? Is this an attack on any particular West Coast tech startup that we know? And it seems like it's much more of an attack on Visa and MasterCard in particular, who have been driving up debit fees for them.

19:52John Coogan:Anyway, did you want to talk more about Fiat's next U.S. car? You mentioned it when we were talking to Baiju from Cowboy Space Company yesterday, the Topolino. It's coming to America. Tiny two-seat electric micro car, they're calling it. It starts at$14 ,000, almost half the price of the other electric golf cart that we talked about last, what was that, last Thursday we talked? Yeah. Two in? But you can fit a lot more people in the Amble. I like this move from Fiat. You like it? I think that their cars are generally unserious. Yes. And so I think it's good to just lean into that. Okay, okay. And I think they're trying to price this so that when people are thinking, hey, I need a new car.

20:37John Coogan:Yeah. Should I go out and buy like a crossover SUV or. There's no way anyone can consider this for their main car. It's impossible. No, but you can if you typically roll around with a handful of people. And instead of buying one car. Oh, you buy a bunch of them. For 60 grand. You'll need a train of them. You know how, you know the range on this thing? 46 miles. 46 miles. I mean, I guess if you have a 10-mile commute, you can totally commute here. They launched an EV with 46 miles of range? It's nothing. They should have called it the Fiat. How long is your commute at? It's less than 10 miles. Less than 10 miles.

21:13They should have called it the Fiat Dice because every time you leave the house, you're rolling the dice.

21:18John Coogan:It's 1 ,000 pounds, so you can deadlift it with another friend. Are you serious? 1 ,000 pounds, yeah. This thing's tiny. It's really, truly, like, so, so small. They're saying it's the cutest car ever made? Look at the speed. The top speed of this car. Tops out at 25 miles an hour. That's with a street legal low-speed vehicle kit. By default, it only goes 19 miles an hour. So how long would it take you to get here? 19 miles an hour? 30 minutes? Yeah, 30 minutes. Wow. That's not too bad. That's not too bad. Maybe you got to do it. Okay. You guys are laughing, but you won't be laughing when I pull up to the office with five of these.

21:59John Coogan:And you need a support car, like a cyber truck behind you. Yeah, no, the Topolino is the support. You just have a series of, you just go train mode. Well, the main other news is that this is somewhat related to New York and Manhattan. A midtown Manhattan skyscraper under construction is reportedly at risk of collapse. The building was the former Pfizer headquarters on East 42nd Street. It was evacuated Tuesday morning after the FDNY received reports around 8 a.m. Eastern time of bricks falling from the high rise. When crews arrived, they found two structural columns inside the building had buckled with floors sagging from the roughly 21st all the way to the 26th floor.

22:48John Coogan:So there's six floors of sagging. This building seems to be falling apart. Video from inside the site shows columns visibly bent, raising immediate concerns about the stability of the building. So far, thankfully, no injuries have been reported. Let's hope it stays that way and construction workers have been accounted for. The site was undergoing one of the most ambitious office-to-residential conversions in New York history. Metro Loft and David Warner Real Estate were converting the former Pfizer complex into roughly 1 ,500 to 1 ,600 apartments with plans to renovate the existing 38-story tower and add more than a dozen new stories to part of the property.

23:28John Coogan:Officials have evacuated the construction site and nearby buildings as a precaution. Very, very crazy. City inspectors and engineers are now in sight investigating the damage and trying to determine whether the building can be stabilized. They'll need to go and rebuild those columns. For now, commuters are being told to avoid the area. So if you're in New York, stay away from East 42nd Street. I hope everyone is safe there. Bad day to be doing that conversion. Yeah, very, very chaotic situation. Anyway. It's also, imagine trying to sell those apartments after you finish. It's like, oh, yeah, moving into the building that was buckling across six different stories.

24:05John Coogan:Yeah. There was a building, was it in San Francisco, the Millennium Tower? Yeah, TZ says good day to be a demolition company. I guess, yeah. Yeah, there was the Millennium Tower that was a very – it was a fancy high-rise in San Francisco. And the foundation, like, sunk a little bit. And so the whole building was tilted slightly. And so if you put a marble on the ground in these, like, luxurious apartments, it would roll. And there was a huge lawsuit. I believe that they were able to go do some structural reinforcement and eventually get it back. Just some saggy floors. Just some saggy floors. Yeah, lock in.