Maybe this is what you meant by "Chinese arms race" but there is, though not quickly, a massive wave of increased hardware supply incoming. Again, let me mention this isn't coming soon in terms of the AI bubble conversation. But China is pushing for a home grown EUV and fabs that should start coming online and having an impact in 2030.
The reason that is important is it will fuel the competitiveness of on premises and local open weight models.
Though maybe it's less useful in the "bubble" conversation since over four more years you could fit in various booms and busts before the supply side significantly starts changing.
Still useful. Especially if Chinese GPUs operating on Nvidia software become performant and accessible, thereby undercutting the price gouging that we're seeing with western chips.
The big issue will be access (Re: BYD)
one good thing about it is that GPUs don't have to be near you, so as long as they're able to be deployed somewhere, they'll be accessible
Access here means being allowed to participate in the market. BYD doesn't have a problem shipping cars, it has a problem of being allowed to sell them.
People will need compute. And if the Chinese economy can transition into providing not only factory output but cheap compute, then yes - the future is indeed theirs. Every single country on this planet will need compute.
so who is going to block sales of Chinese chips aside from the US?
I'm betting many countries will allow companies to buy and deploy them in their countries
The EU is also quite skeptical of Chinese exports, though it remains to be seen how that will evolve once the EU-USA relations settle into a new normal. Certainly the EU wouldn't be happy, though, if China managed to break ASML's monopoly on EUV machines, and at seek to retaliate with economic pressure on chips.
problem is if you can just rent cheap compute from elsewhere, you'd need to ban buying compute and all that which I'm not so sure would work. maybe heavy regulations could do it buuut....