US providers are burning VC money because they have been selling the idea of total world domination. Even the government has bought into that. Now suddenly they are not longer dominating the field and even need uncle Sam to protect them from foreign competitors.

When VC pulls out, some of them may go bankrupt.

They can still dominate wrt. the biggest and smartest models. DeepSeek does effectively nothing to change that. Of course these big models will be served at a very steep price in order to fully and completely recoup the investment, but there's no reason why that couldn't work if they really are smart enough and if the market value of smarts follows any kind of scaling law.