According to media reports, the second round of financing for the Chinese artificial intelligence (AI) startup company “DeepSeek” was suddenly halted, sparked by a leaked speech by its founder, Liang Wenfeng, earlier this year. In the speech, Liang inadvertently revealed the true level of AI in China and the clandestine acquisition of American AI chips and technology, confirming long-standing allegations by Washington. This revelation may subject the company to special scrutiny by regulatory authorities in both China and the United States.
DeepSeek has orally notified investors that the new round of financing has been temporarily suspended with no definite restart date, as reported by Bloomberg citing sources on Saturday, July 25.
The decision to halt the funding was partly due to Liang Wenfeng’s displeasure at his speech circulating online following an investor forum. The speech contained confidential company information, insights into the current state of the Chinese AI industry, and sensitive details on how to steal and utilize American technology and equipment.
As reported by the Financial Times on July 14, DeepSeek had just completed its first round of financing in June, raising a total of 50 billion yuan (approximately 7.4 billion USD) with a post-funding valuation of around 50 billion USD (roughly 338 billion yuan).
In the first round of financing, Liang Wenfeng personally invested 20 billion yuan. Tencent Holdings and battery giant CATL each invested 10 billion yuan and 5 billion yuan respectively, becoming the largest external shareholders. JD.com, Netease, and IDG Capital each contributed 3 billion yuan. The National Artificial Intelligence Industry Investment Fund invested 1 billion yuan.
Just weeks after the initial round, DeepSeek initiated negotiations for the second round of financing, showing a rapid expansion pace.
If the new financing round is successful, the company’s valuation is expected to reach around 71 billion USD (approximately 480 billion yuan), a 37% increase from the post-first-round valuation.
In a report by Bloomberg on July 14, it was revealed that DeepSeek has begun preparations for its initial public offering (IPO), possibly filing for listing later this year.
A leaked recording of Liang Wenfeng’s speech circulated online, where he admitted that compared to their American counterparts, Chinese AI companies could only train models at a “fraction” of the scale. He disclosed that DeepSeek currently possesses approximately 20,000 computing chips equivalent to NVIDIA H series, with most arriving in the last one to two months.
Liang candidly stated that with the current computing power, the company is unable to train top-tier large models comparable to American counterparts even if the entire 50 billion yuan from the first round of funding is invested.
In the realm of AI large model technology, Liang’s remarks reveal significant discrepancies from prior optimistic evaluations regarding the substitution of American chips with domestic ones.
He pointed out that Huawei’s Kirin 950 chip would require about four of them to match one NVIDIA chip, lagging behind by approximately two years.
The information provided significantly differs from Huawei’s claim earlier this month when the company displayed the “Kirin 950 super node,” boasting total computing power 6.7 times that of a comparable NVIDIA system.
Liang also disclosed that the production capacity of domestic chips remains a bottleneck, with Huawei’s supply capacity currently at 16,000 chips, much lower than internet giants who can produce tens of thousands of chips.
Up to now, numerous cases have confirmed that Chinese AI companies have purchased a large number of Nvidia AI chips subject to U.S. export controls.
In March, Supermicro co-founder Liao Yixian and Taiwanese intermediary Sun Tingwei were arrested in San Jose, California for allegedly selling chips to China.
In June, Taiwanese card manufacturer Green Yun Technology was searched by Taiwanese prosecutors, with then-general manager Lu Yangkai and two salespeople from Supermicro’s Taiwan branch being detained.
Despite Liang expressing confidence in Huawei, Chinese chips, and China’s future computing power deployment, showing a positive outlook, due to sensitive content involved, DeepSeek may still face special scrutiny from U.S. and Chinese authorities.
The U.S. has recently stressed that even if chips are deployed overseas, if the user or parent company is in China, they may still be subject to export controls.
As of the time of writing, DeepSeek has not made any public response regarding the veracity of the speech content and the suspension of funding.