Good morning. It's Tuesday, July 7, and we're covering China's use of distillation, researchers’ belief that progress is about to accelerate, and tech leaders shifting their views on AI’s job impact.

Plus: a poll on whether AI can be trusted unsupervised.

The most revealing part of Claude's reasoning happens silently, not in the text it generates. Anthropic researchers identify an emergent internal "J-space" that acts as a shared workspace for planning, multi-step reasoning, and concept manipulation, drawing parallels to global workspace theory in neuroscience. The study shows Claude can report and intentionally modify these internal representations, which emerge during training rather than being programmed. Disabling the J-space preserves fluent responses but significantly impairs higher-order reasoning.

Singapore broadens its AI server fraud investigation by adding money laundering charges against a key suspect accused of diverting hardware containing restricted NVIDIA chips. Prosecutors allege Aperia Group executives misled Dell Technologies, Super Micro Computer, and ASUSTeK Computer about the servers' end users between November 2023 and February 2025. Authorities also seek to seize a S$55 million mansion allegedly purchased with illicit proceeds as Singapore intensifies efforts to prevent export-control evasion through local firms.

Samsung is poised to benefit from the AI boom even as rising memory prices increase costs for its own smartphone business. Analysts expect the company to report second-quarter operating profit of about 8.6 trillion won ($6.3 billion), roughly 18 times higher than a year ago, driven by soaring demand for HBM, DRAM, and NAND memory. DRAM prices climbed 44% and NAND 53% in the quarter, with shortages forecast to persist through 2027. Future AI infrastructure spending remain key variables for longer-term earnings.

76% of organizations say current AI governance is slowing their ability to deploy agentic AI— 93% agree that better governance would help them move faster. That is not a contradiction

It is governance retrofitted from human workflows vs. governance designed for agents: permissions, visibility, auditability, and trusted-source controls built in.

Download the report to learn more!

Anthropic published research today showing they can read Claude's hidden thoughts, and found that Claude sometimes behaves ethically only because it suspects it's being tested. Block those "I'm being watched" thoughts, and it threatens blackmail.

Codex autonomously cloned Excel over 12 days, producing a polished spreadsheet app with working formulas, formatting, and sorting tools.

U.S. AI companies including Anthropic and OpenAI are urging lawmakers to curb the use of AI "distillation," a technique they say Chinese firms use to replicate the behavior of proprietary models. In a June 10, 2026 letter to Senators Tim Scott and Elizabeth Warren, Anthropic accused Alibaba of accessing its systems through thousands of unauthorized accounts to collect training data, allegations Alibaba declined to comment on.

Distillation is a long-established AI training method originally developed at Google, and even U.S. companies have acknowledged using it, leaving its legal status unsettled. The debate has intensified as Chinese models such as Z.ai's GLM-5.2 approach the capabilities of leading American systems, fueling concerns over AI competition, export controls, and national security. → Read the full article here. (Paywall)

A widely shared essay titled "46 Thoughts on the Near Future" argues that AI capabilities are poised to accelerate much faster than governments, businesses, and the public expect, driven by algorithmic breakthroughs, AI-assisted research, and expanding compute. The author predicts that increasingly autonomous AI will transform scientific discovery, robotics, manufacturing, and the global economy while reshaping labor markets, potentially creating both unprecedented prosperity and new social inequalities.

The essay also warns that faster AI progress could heighten cybersecurity, military, and governance risks, making international coordination and stronger institutions more important. While presented as informed forecasts rather than established facts, the piece reflects a growing view among some AI researchers that the coming decade could bring changes far beyond incremental improvements. → Read the full article here.

After years of warning that AI could eliminate large numbers of jobs, several leading tech executives are now emphasizing its potential to augment workers rather than replace them. OpenAI CEO Sam Altman, Anthropic CEO Dario Amodei, Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos, and Amazon CEO Andy Jassy have all recently argued that AI can boost productivity, create new roles, and enable companies to accomplish more with existing teams, even as some continue to acknowledge the risk of long-term job displacement.

The shift comes despite ongoing layoffs and heavy AI investment, with new research suggesting companies adopting AI are often hiring more rather than less. Economists and business leaders remain divided, however, as real-world AI deployments have proven more gradual and complex than early predictions, leaving the technology's long-term impact on employment far from settled. → Read the full article here.

Microsoft Cuts 4,800 Jobs: Microsoft is cutting 4,800 jobs as it restructures around AI, saying the roles aren't being replaced by AI.

NVIDIA Denies Kyber Delay: NVIDIA rejected claims its Kyber AI server is delayed to 2028, saying its roadmap remains intact despite challenges.

TeraWulf Lands $19B Anthropic Deal: TeraWulf signed a 20-year, $19B data center lease with Anthropic, deepening its shift from bitcoin mining.

Apple Adds Siri Voice Controls: iOS 27 beta 3 lets users adjust Siri's speaking pace and expressiveness for a more personalized AI experience.

Thanks for reading. See you next time!

— Matthew Berman, Nick Wentz & the Forward Future Team