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Ben Jiang

Chinese artificial intelligence high-flier DeepSeek is expected to close its first external financing round soon, boosting its valuation to up to US$50 billion, according to three people familiar with the matter, as the country’s marquee state-backed investment vehicle joins in bankrolling what is seen as a national technology champion.
The round was being backed by a group of state-linked investors, including AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, known as the “Big Fund III”, the people said, requesting anonymity because the information is private.
Global investment firm Hillhouse was also involved in the funding discussions, the people said. Shenzhen-based video gaming and social media giant Tencent Holdings took part in the round too, they added. The final valuation could still change as talks were ongoing, they said.
DeepSeek, the Big Fund III, and Tencent did not immediately respond to a request for comment. A Hillhouse spokesman said the firm was not making an investment in DeepSeek.
The latest valuation – five times the initial US$10 billion value local media outlets reported last month when the Hangzhou-based frontier AI lab started the funding round – reflects the interest of some of China’s largest state-backed investors and underscores the company’s growing importance in the intensifying race between the US and China for AI leadership.
Sources told the South China Morning Post earlier that DeepSeek was prioritising state-backed and industrial investors, including local government guidance funds and affiliated platforms, in its first financing round, favouring those that could provide strategic resources such as AI infrastructure over those that could only offer capital.
The fundraising follows the firm’s introduction of V4, its long-overdue major AI model update. It debuted in late April, more than a year after DeepSeek launched its high-performance and low-cost V3 and R1 models, which shocked the world by matching up to world-leading US models at a fraction of the development cost.


Since then, local competitors including Zhipu AI, MiniMax and Moonshot AI have elbowed past the company with a series of open-source models that have won global recognition and adoption.
Despite the long delay, V4 was seen as a comeback, which the company said was competitive with leading US closed-source models from the likes of OpenAI and Google DeepMind.
The model’s introduction triggered a race among local semiconductor makers to adapt their chips to run the model, in line with Beijing’s priority of integrating domestic chips and AI models given the growing US chokehold on the most advanced chips.
In five years, more than 80 per cent of local AI infrastructure in China would use locally produced chips, representing a significant jump from the current 20 per cent, consultancy Gartner said in a March note.
Chinese chipmakers have been racing to adapt to DeepSeek’s new model. Shenzhen-based tech giant Huawei Technologies was among the first to announce that DeepSeek’s V4 was fully adapted to its Ascend 950PR chip platform.
It added that its full line of AI processors, including the A2, A3 and 950 series, were compatible, positioning the Ascend 950PR as a primary chip for inferencing.
Other Chinese chipmakers from Cambricon Technology to MetaX and Moore Threads have also adapted their chips to run DeepSeek’s new model.
DeepSeek was spun off in 2023 from its parent, High-Flyer – one of China’s most profitable hedge funds last year – as founder Liang Wenfeng pursued ambitions in artificial general intelligence – AI capable of matching human performance across a wide range of tasks.
Data from corporate registry service Qichacha showed that as the company was seeking fundraising, Liang’s equity stake increased to 34 per cent from 1 per cent, with his subscribed capital jumping from 100,000 yuan (US$14,630) to 5.1 million yuan.
Additional reporting by Wency Chen and Karen Tian


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Backers include AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, sources say


Backers include AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, sources say.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Backers include AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, sources say

Backers include AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, sources say