US AI Sector Faces Policy Fracture Amid Kimi Launch and Security Breaches

Kimi K3 launch and Hugging Face breach trigger US policy divergence. Congress proposes kill switches; industry splits on open weighting as chip stocks slump 10%.

Woofun AI reports that the launch of Kimi K3 and a subsequent security breach at Hugging Face have accelerated fragmentation in US AI policy. The Philadelphia Semiconductor Index declined 10% in one week, entering a bear market as concerns over Chinese model competition and capital expenditure intensified.

Legislative and industry responses diverged sharply. Congress proposed an AI "kill switch" and mandatory security audits, while offering limited antitrust exemptions for intelligence sharing. NVIDIA, Microsoft, and Meta supported open weighting, whereas Anthropic advocated for chip restrictions and mandatory testing. The Trump administration reconsidered restrictions on Chinese models, and Treasury Secretary Scott Bessent mentioned potential sanctions.