According to four people familiar with the talks, the Financial Times reported on Tuesday that China’s largest state-backed semiconductor investment vehicle is in advanced negotiations to lead the first external funding round for AI company DeepSeek at a valuation of roughly $45 billion.
Its mandate, which has traditionally concentrated on chip production, memory manufacturers, and semiconductor equipment rather than AI model laboratories, would be drastically expanded by the China Integrated Circuit Industry Investment Fund, also referred to as the “Big Fund” in the industry.
3 Weeks, From $10 Billion To $45 Billion
The valuation is an impressive increase. According to The Information and Reuters, DeepSeek was aiming for at least $300 million at a $10 billion value when it started fundraising discussions in mid-April. The amount surpassed $20 billion by late April when Alibaba and Tencent started talks. It has increased to almost $45 billion, more than four times the initial amount, with the Big Fund now involved as a possible lead.
Alongside the Big Fund, China’s national AI fund is allegedly taking part in the round. Tencent, Alibaba, DeepSeek, and the Big Fund have not made any public comments, and the round is still open.
A Change In Beijing’s Strategy
In its third funding phase in 2024, the Big Fund raised $47 billion from state-owned banks, local governments, and China’s finance ministry. Given that US export restrictions continue to limit China’s access to cutting-edge GPUs, a direct investment in a frontier AI facility would be the most obvious indication so far that Beijing sees model capability—rather than just chip manufacturing—as essential to its AI strategy.
Liang Wenfeng, a co-founder of the quantitative hedge fund High-Flyer Capital Management, started DeepSeek in July 2023. Up till now, the company has been fully self-funded. On April 24, the week funding talks were made public, the business unveiled DeepSeek V4, its trillion-parameter flagship model.
What’s Next
A state-backed main investor could change DeepSeek’s course. Chinese state vehicles, according to analysts, usually provide access to government clients, regulatory protection, and expectations for strategy alignment. However, they may also place restrictions on the company’s very transparent model weight and technical documentation releases.
The precise details of the agreement are still up for debate, including how governance rights will be organized and if Tencent and Alibaba will participate at the enhanced valuation.