A New Chinese AI Resets the Global Tech Race

Summary

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WSJ What’s News – A New Chinese AI Resets the Global Tech Race

Date: June 29, 2026
Host: Luke Vargas, The Wall Street Journal

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Episode Overview

This episode explores three major topics shaping the day:

• A major leap for Chinese artificial intelligence and its potential to reset the ongoing global tech rivalry, particularly in cybersecurity.
• The vulnerability of unsecured smart devices in homes, and their emerging role in large-scale cyberattacks.
• Updates on global crises, including the aftermath of earthquakes in Venezuela, renewed U.S.-Iran peace talks, and a surprise comeback by Serena Williams at Wimbledon.

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Key Discussion Points and Insights

1. China’s New AI Model and the Global Tech Race

• Chinese AI Parity in Cybersecurity (00:32 – 03:02)

  • Chinese researchers have released a new open-weight AI model, "Z AI", which rivals U.S. leaders Anthropic and OpenAI in finding security bugs.
  • While Z AI trails leading U.S. products in some tasks, its open-source nature makes it widely accessible and potentially uncontrollable by regulators.
  • U.S. lawmakers have sought to restrict disruptive models like Anthropic’s "Mythos," but open-weight releases undermine these efforts.

  “There’s a kind of toothpaste out of the tube scenario... if those models are out there and they have similar capabilities, then there are some critics who say the US is just shooting itself in the foot by not allowing US companies to sell and distribute their models as well.”
  — Sam Schechner (02:05)

• Policy and Industry Reaction

  • U.S. businesses are adopting Chinese open-weight models, spurring criticism that the White House hasn’t restricted their use enough.
  • Jacob Helberg, Undersecretary of State for Economic Affairs, insists the government is addressing the issue, but critics remain skeptical.

2. Global Markets, U.S.-Iran Tensions & Venezuela Earthquakes

• South Korea Semiconductor Surge (03:02 – 03:40)

  • South Korea announces nearly $2 trillion for expanding its semiconductor sector, with major investments from Samsung and SK Hynix.
  • These firms, along with U.S.-based Micron Technology, dominate the high-bandwidth memory chip market critical for AI processing.

• U.S.-Iran Peace Talks Resume (03:40 – 05:47)

  • Following a spike in military attacks, the U.S. and Iran agree to restart peace talks in Doha, Qatar.
  • Key topics: avoidance of future attacks, the release of Iranian assets (restricted to humanitarian aid), and the cyclical nature of negotiation and conflict in the region.

  “There’s always strike and talk, there’s always attacks and then there’s negotiation... The US has said it’s only humanitarian money, only for food, so that benefits really the Iranian people.”
  — Benoit Fou Khan (04:58)

• Venezuela Earthquakes (05:47 – 07:05)

  • Nearly 50,000 people remain missing in Venezuela after recent earthquakes; over 1,400 confirmed dead and the toll is expected to rise.
  • Residents criticize Acting President Delsey Rodriguez’s government for slow and restrictive disaster response.

3. The Hidden Danger of Smart Devices in Cyberattacks

• Exploit of Everyday Devices (07:39 – 10:57)

  • Internet-connected home gadgets—from smart doorbells to digital picture frames and streaming boxes—are being co-opted into massive cyberattack networks via secret digital backdoors.
  • Journal reporter Jack Gillum conducted firsthand tests, finding that certain devices, once connected, immediately generated surges of illicit web activity, indicating remote control by criminal actors.

  “For just under $800 total, I purchased ... devices ... Within minutes of turning the devices on, there was a surge of Internet traffic ... visits to gambling, porn, cryptocurrency and loads of other sketchy websites started pouring in from users around the world.”
  — Jack Gillum (08:21)

  • Hackers leverage residential proxy networks—internet connections from compromised home devices—to hide their tracks and amplify attacks, including distributed denial-of-service (DDoS).
  • Experts warn this vector has enabled cyberattacks of record-breaking scale, with some warning of even larger incidents ahead.

  “We have seen some of the largest computer attacks ... ever recorded in our digital history in the last several months. And some warning, there are much larger ones on the horizon if we don’t get a hold of this problem.”
  — Karim Marouz, Comcast (10:05)

  • Device makers and retailers (Amazon, Walmart) responded to inquiries, promising action against non-compliant third-party sellers and infected products.

  • Actionable Advice: The episode encourages listeners to check the show notes for tips on protecting their devices from backdoor exploitation.

4. Serena Williams’ Wimbledon Comeback

• Surprise Entry and Personal Reflection (11:53 – 12:09)

  • Serena Williams, 44, returns to singles play at Wimbledon on a last-minute wildcard.
  • She shares a reflective moment about seizing rare opportunities late in her career.

  “Well, I thought not every day Wimbledon holds a wild card for someone and I can name probably like a handful of people and happen to be one of those people and I thought, well, I should really take this opportunity. Who knows if I’ll ever make it here again. This could be it.”
  — Serena Williams (11:53)

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Notable Quotes & Memorable Moments

• On open-weight AI models and global competition:
  "There's a kind of toothpaste out of the tube scenario...you have on one hand the US trying to lock down some of these capabilities..."
  — Sam Schechner (02:05)

• On Iran-U.S. negotiations:
  “There’s always strike and talk, there’s always attacks and then there’s negotiation...the US has said it’s only humanitarian money, only for food...”
  — Benoit Fou Khan (04:58)

• On the personal side of cybersecurity flaws:
  “Within minutes of turning the devices on, there was a surge of Internet traffic ... started pouring in from users around the world.”
  — Jack Gillum (08:21)

• On the sheer scale of cyberattacks enabled by home devices:
  “We have seen some of the largest computer attacks...in our digital history in the last several months.”
  — Karim Marouz (10:05)

• On the rarity and significance of Serena Williams’ wildcard:
  “...I can name probably like a handful of people...that happen to be one of those people...who knows if I’ll ever make it here again. This could be it.”
  — Serena Williams (11:53)

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Important Timestamps

• 00:32 — Introduction to the Chinese AI story and concerns about unsecured smart devices
• 02:05 — In-depth with Sam Schechner on U.S. and Chinese AI race and policy ramifications
• 03:40 — Restart of Iran-U.S. peace talks, analysis of humanitarian funds
• 05:47 — Update on Venezuela earthquake aftermath
• 07:39 — Begin detailed coverage on smart home device vulnerabilities
• 08:21 & 08:56 — Jack Gillum’s experiment with compromised products
• 10:05 — Comcast’s Karim Marouz on the unprecedented scale of current cyberattacks
• 11:53 — Serena Williams on her unexpected Wimbledon singles return

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Summary

This episode underscores how fast-moving developments in AI, particularly from China, are challenging U.S. dominance and regulatory strategies — with open-source models creating complications for government control. Simultaneously, it highlights the growing threat posed by insecure smart home devices being hijacked for cybercrime, as explained through vivid real-world testing and expert analysis. Finally, the episode provides a moment of sports history with Serena Williams’ inspirational return to singles play at Wimbledon.

Listeners are left with a clear understanding of the intersection between global tech competition, national security, and personal digital safety, against the backdrop of shifting world events and a touch of sports inspiration.

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Transcript

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[Luke Vargas]

a big leap for Chinese AI as researchers find that a new model goes toe to toe with Anthropic in cybersecurity. Plus, we'll look at how your unsecured smart devices could be playing a role in massive cyber attacks.

[Karim Marouz]

What we're seeing is through these RES proxy networks. That's the initial entry point that creates a whole set of computers, laptops, streaming devices, picture frames, smart refrigerators all hitting the same site at the same time. Very few sites in the world are resilient to that level of inbound traffic.

[Luke Vargas]

And a staggering death toll starts coming into focus after last week's Venezuela earthquakes. It's Monday, June 29th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world today. China has caught up with Anthropic in cybersecurity, potentially resetting the global AI race. Security researchers say that a new model released by China's Z AI lags behind products from Anthropic and OpenAI in some tasks, but can match them in finding security bugs. The release of the model comes as US Lawmakers have tried, restricting access to the most potentially disruptive AI models, like Anthropic's Mythos. However, as journal tech reporter Sam schechner explained, Z AI's model being open weight, meaning it can be downloaded, used, and modified without supervision, makes that impossible.

[Sam Schechner]

What that means is that there's a kind of toothpaste out of the tube scenario. You have on one hand the US Trying to lock down some of these capabilities. I mean, you have Anthropic saying, okay, we're not going to release the most powerful version of Mythos beyond a certain set of trusted partners. And then you even had the administration telling Anthropic that it had to pull back its fable model because the guardrails against foreign use weren't high enough. So the question of whether or not these capabilities that could help enable potential cyber attacks are going to get out there is becoming a much more real one. And then on the other side of the street, practically, you have another company giving away models with similar capabilities for free. And so if those models are out there and they have similar capabilities, then there are some critics who say the US Is just shooting itself in the foot by not allowing US Companies to sell and distribute their models as well.

[Luke Vargas]

Critics of the White House AI strategy say it's been lax in restricting use of Chinese open weight models, which are popular among US Businesses. Jacob Helberg, undersecretary of State for Economic affairs, defended the administration, saying it's very much focused on Chinese open source models. South Korean stocks have pared their losses today after the country's president announced a plan to invest nearly $2 trillion in the country's semiconductor sector, data centers and robotics. Memory chip giants Samsung and SK Hynix also committed to substantial new investments to build chipmaking facilities. SK Hynix, Samsung and US Company Micron Technology are the world's leading suppliers of high bandwidth memory chips, which are crucial components for Nvidia's AI accelerators. Shares of both Korean companies have been on a wild ride this year on the back of the AI buildout, with both crossing the $1 trillion market value threshold. After days of back and forth fighting, the US And Iran have agreed to resume peace talks. The latest flare up began on Thursday and reached a peak over the weekend as the US Hit a range of Iranian targets and Tehran said that it targeted American bases in Kuwait and Bahrain. Middle east correspondent Benoit Fou Khan told me that after things potentially heading towards a return to war, talks in Qatar are reportedly back on.

[Benoit Fou Khan]

They would take place possibly this week in Doha, which is one of the parties that was attacked by Iran, but is the key mediator. We'll focus on the threat of Hormuz, trying to find an understanding between both sides, but potentially, I would suspect also on the release of cash that is held in Qatar and most importantly, both sides agrees to stop attacking each other.

[Luke Vargas]

Benoit Is there any real appetite, though, for potentially releasing money to Iran if just in the last few days the country has been launching new attacks around the region?

[Benoit Fou Khan]

First of all, remember, we are talking about a cycle where there's always strike and talk, there's always attacks and then there's negotiation, there's attacks and there's negotiations again. So obviously the question would be whether, like you say, there would be an agreement to release some cash when there could be a real suspicion that it could be used to fund the military. Now on that there is a limitation. I mean, the US has said it's only humanitarian money, only for food, so that benefits really the Iranian people. And according to the US it's also US Products. The other thing is it would be gradual, so it would be limited amounts at a time. That's pretty much the reason we suspect that Iran stopped the fighting, because they realized that the next sequence, which is getting some cash, is going to be jeopardized. So I think it's a huge incentive for Iran to stop the fighting to think they could get some money released.

[Luke Vargas]

Oil prices are trading slightly higher today on renewed supply concerns, though they remain below Friday's levels when the US and Iran were trading a tax. And nearly 50,000 people remain unaccounted for in Venezuela following a pair of earthquakes last Wednesday. That's according to an online platform tracking missing loved ones. Venezuela's government has said that more than 1,400 people died, though officials expect that number to rise. With hopes fading of finding more survivors. Families who've been digging, digging through the rubble of collapsed buildings themselves have pled for more support from authorities, including heavy machinery. Some residents have criticized the government of Acting President Delsey Rodriguez, accusing it of restricting volunteer workers access to disaster sites and bureaucracy that slowed the arrival of rescue teams from overseas. The Venezuelan government didn't respond to requests for comment. Coming up, how your home devices could secretly be powering cyber attacks and we'll cast our eyes to center court for an unexpected return at Wimbledon. Those stories after the break

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[Luke Vargas]

Smart devices are everywhere these days and while they're aimed at making our lives more seamless, these everyday gadgets, from innocent looking smart doorbells to our cell phones, could be our biggest privacy vulnerability.

[Jack Gillum]

Our homes are filled with Internet connected devices and every year millions of those products, especially knockoffs that you buy online, can contain a secret digital backdoor that opens up access to your home Internet so that anyone, including bad actors, can surf the web as if they were you. Now cybercriminals are taking advantage of this loophole.

[Luke Vargas]

Journal reporter Jack Gillum tested a number of these malware riddled products to how criminals are using them to launch cyber attacks.

[Jack Gillum]

For just under $800 total, I purchased two digital picture frames from Amazon and three super boxes from Walmart. These are streaming devices that connect to your TV and give you free access to shows and movies. Within minutes of turning the devices on, there was a surge of Internet traffic on an entirely separate Internet connection. I set up for this experiment, visits to gambling, porn, cryptocurrency and loads of other sketchy websites started pouring in from users around the world.

[Luke Vargas]

Jack says that by leveraging home Internet connections, criminals are carrying out some of the biggest cyber attacks we've ever seen.

[Jack Gillum]

Security experts believe manufacturers are being paid to add this malware, but many people also get tricked into downloading the software onto their phones or computers. Once you connect an infected device to the Internet, the backdoor software links up with an intermediary server that's run by what's known as a residential proxy company. These residential proxy companies rent out access to tens of millions of home networks around the world. But the problem is actually worse than that. Hackers figured out a way to seize control of these backdoors and they started taking over these residential networks.

[Luke Vargas]

Residential proxy networks aren't always used for nefarious reasons, as companies can use them to see how their ads are being viewed from the perspective of real users. However, government and industry officials say these networks have ballooned in recent years and have been adopted by government backed hackers looking to hide their connection to countries like Russia, China and North Korea. Investigators at Comcast started looking into this more than two years ago and their findings that linked millions of consumer devices to criminal activity rocked the cybersecurity world. Karim Marouz is Comcast's executive director of cybersecurity.

[Karim Marouz]

Let's imagine we pile every friend of ours we've ever known. We say, hey, at 12 noon on Thursday, let's send a bunch of traffic to some site we're not thrilled with today. That's effectively what a distributed analysis attack is. But now it's done at massive scale. Let's say a million machines, 2 million machines are doing that simultaneously. What we're seeing is through these res proxy networks, that's the initial entry point that creates a whole set of computers, laptops, streaming devices, picture frames, smart refrigerators, all, all hitting the same site at the same time. Very few sites in the world are resilient to that level of inbound traffic. We have seen some of the largest computer attacks, meaning computers attacking other computers at human request ever recorded in our digital history in the last several months. And some warning, they're much larger ones on the horizon if we don't get a hold of this problem.

[Luke Vargas]

The makers of the photo frame couldn't be reached for comment and Amazon said that the product is out of stock and that it takes action when it confirms that a third party product is infected with malware. Walmart said that all items sold through third party sellers are expected to meet the company's standards and that when a violation is detected, swift action is taken. To find out how to protect your devices from backdoor hackers, check out the link we've left in our show notes and finally, it's time to get two TVs going as the summer of sports heats up joining the World cup knockout stage, Wimbledon is getting underway this morning in London and in addition to appearances by the game's current stars, this year's championships will see the return of 44 year old grand Slam winner Serena Williams, who was already slated to play doubles with her sister Venus, but accepted a last minute wild card slot to play singles.

[Serena Williams]

Well, I thought not every day when Bloom holds a wild card for someone and I can name probably like a handful of people and happen to be one of those people and I thought, well, I should really take this opportunity. Who knows if I'll ever make it here again. This could be it.

[Luke Vargas]

Serena's first singles match in nearly four years is scheduled for tomorrow when she'll face off against 20 year old Australian Maya Joint. Though if you can't wait that long for the tennis, don't worry because competition began just as we had published this morning. And that's it for what's news for this Monday morning. Today's show was produced by Daniel Bach and Hattie Moyer. Our supervising producer is Sandra Kilhoff and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show and until then, thanks for listening.

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