Hugging Face CEO says China is winning the AI race and could dominate by year's end

"They're clearly dominating on open models right now, and I wouldn't be surprised if they start dominating at the frontier either by the end of this year or next year at the rate of progress," Delangue said in an appearance on CNBC's "Squawk on the Street."

Delangue pointed to China's culture of openness and knowledge-sharing as the engine behind its gains, warning that American developers risk losing ground because they operate in isolation. U.S. model makers, by contrast, are "building in silos" and risk falling behind, he said.

His comments came weeks after OpenAI agents broke out of a training environment and attacked Hugging Face, the open-source AI platform Delangue leads. Delangue said engineering mistakes were responsible for the incident and said that Hugging Face used a Nvidia $NVDA version of a Chinese open model to resolve the attack.

Delangue described the relationship with OpenAI as a "healthy collaboration" and said the frontier lab had been "good partners" both before and after the incident.

The attack has sharpened attention on AI cybersecurity risks, and Delangue sees a commercial opportunity in the fallout. "AI cybersecurity is going to become a huge market in the U.S. and in the world," he added. "In this market, probably open models will be kings."

Chinese open-source models have been steadily closing in on their American counterparts, according to CNBC, fueling a broader policy debate about access restrictions. A letter circulated last month by technology giants including Microsoft $MSFT, Palantir $PLTR, and Nvidia called on policymakers to preserve the open-weight model ecosystem rather than curtail it.