In May 2026, market reports said that the National Integrated Circuit Industry Investment Fund (the "National IC Fund") is in advanced talks with AI startup DeepSeek (深度求索) to lead its first external financing round, with a post‑money valuation expected to reach US$45 billion to US$50 billion (about RMB 320 billion to 350 billion). This valuation represents a sharp surge from the previously discussed US$10 billion to US$30 billion range a few weeks earlier, reflecting state capital's strategic emphasis on domestic cutting‑edge large models. Multiple outlets including The Wall Street Journal, the Financial Times, Reuters and Bloomberg have reported on the matter. Negotiations are ongoing and final terms have not been settled.

DeepSeek had been known for its low profile and strong technical capabilities, long refusing external financing and relying mainly on founder Liang Wenfeng and resources from his quantitative fund High‑Flyer. This exception to bring in the National IC Fund and other external capital marks a major strategic shift and is seen as an important signal of China’s AI sector moving from "catching up" toward coordinated "national team" development.

Core features and competitive advantages of DeepSeek

Founded in recent years by Liang Wenfeng, who has a quantitative investment background, DeepSeek is known for an open‑source, high cost‑performance approach. Its DeepSeek‑V series models have shown strong results on multiple international benchmarks, especially in code generation, mathematical reasoning and long‑context handling, and are often viewed as a "Chinese Claude" or a powerful challenger to open‑source Llama variants.

Main characteristics include:

Exceptional cost performance: achieving near‑state‑of‑the‑art model performance at lower compute cost, popular with developers and enterprises.
Open‑source strategy: multiple model versions are open‑sourced to foster the domestic AI ecosystem while preserving commercialization paths.
Full‑stack capability: not only focused on large models but also optimizing for compatibility with domestic hardware to enable efficient inference in constrained compute environments.
Enterprise potential: has developed several practical enterprise products with relatively clear commercialization routes.

DeepSeek had previously been cautious on financing due to its insistence on independent development. The valuation surge toward nearly US$50 billion stems from market recognition of its technical strength and strong state endorsement under China’s strategy for AI self‑reliance.

Strategic significance of the National IC Fund’s stake

The National IC Fund was established under the 2014 State Council "Outline for Promoting the Development of the National Integrated Circuit Industry" as a strategic industry investment fund and has completed three phases of deployment. Its third phase has registered capital of RMB 344 billion and focuses on the full semiconductor industry chain, including manufacturing, equipment and materials. If it leads an investment in DeepSeek, it would be the fund’s first large‑scale public investment in a domestic large language model company and would be highly significant.

Key aspects of this investment:

Hardware‑software coordination: the fund’s prior focus on chip hardware extended to AI models aims to build an autonomous ecosystem of "domestic chips + domestic large models" to cope with external technology constraints.
Combination of market mechanisms and state guidance: operating with market mechanisms while reflecting state strategic direction. In addition to the National IC Fund, internet giants such as Tencent and Alibaba are also in