- China's state-backed semiconductor investment fund is seeking to lead DeepSeek's first fundraising round.
- DeepSeek's valuation has surged to about $45 billion, with other investors still in talks for a stake including Tencent and Alibaba.
China's biggest state-backed semiconductor investment fund is in talks to lead the first fundraising round for AI startup DeepSeek, the Financial Times reported on Wednesday.
The potential deal could value the frontier AI lab at about $45 billion, according to the report.
The China Integrated Circuit Industry Investment Fund, typically referred to as the "Big Fund," is seeking to lead the round, people familiar with the matter said. However, details of the financing and the final lineup of participants have not yet been finalized.
Other investors still in talks for a stake include Chinese tech giants Tencent and Alibaba, the report said.
Tencent recently announced it will increase its AI investment this year to more than 36 billion yuan ($5.28 billion).
DeepSeek's valuation has increased significantly in just a few weeks, up from the $20 billion expected when it started fundraising talks earlier. Investors are striving to bet on the lab's massive potential despite its current lack of focus on commercialization.
The Hangzhou-based startup was founded by billionaire Liang Wenfeng, who currently controls the company through personal holdings and affiliated entities.
Liang could also invest his personal funds in this round, the FT cited people familiar with the matter as saying.
Backing from China's most strategic government chip fund would reinforce DeepSeek's position as a leader in the country's frontier AI sector.
At the same time, the investment would also promote the development of a Chinese tech ecosystem comprising domestic models, software, and chips.
The Big Fund has previously provided crucial financial support mainly to key manufacturing players in China's semiconductor industry, such as Semiconductor Manufacturing International Corporation (SMIC) and Yangtze Memory Technologies.
Notably, the state fund has not publicly backed any of China's large language model developers before.
DeepSeek shot to prominence in January 2025 following the release of R1, a powerful open-source large language model, which cost a fraction of the computing power to train compared with its US rivals.
The company said in its latest V4 model launch that the model has been optimized for inference on Huawei's Ascend 950PR chips.
This trend of hardware-software synergy has drawn close attention from the US tech sector and is seen as potentially posing a danger to US global dominance.
Nvidia CEO Jensen Huang warned in a recent interview that it would be a horrible outcome if global AI models run on non-American hardware.
($1 = 6.8233 yuan)
