Chinese AI lab DeepSeek has abruptly halted its second major fundraising round after private remarks by its founder Liang Wenfeng leaked on social media, sending ripples through the tech industry and reigniting fears in the U.S. about China’s AI progress.
Citing sources familiar with the matter, Bloomberg reported that the company told some investors the signing process “will not happen for now,” just weeks after closing a $7 billion first round in June. The new round was targeting at least 10 billion yuan ($1.4 billion) and could have grown larger, with a pre-money valuation of at least 480 billion yuan—well above the roughly $50 billion level set in the initial deal. Early backers Tencent and battery giant CATL are already on board.
The freeze followed a viral transcript of an investment meeting allegedly led by Liang. While Bloomberg could not verify its authenticity, Chinese outlet Yicai reported that Liang discussed China’s dependence on Nvidia hardware and the country’s lagging AI development compared with the United States. DeepSeek may reopen the fundraising later, and talks remain alive, but the sudden pause has cast uncertainty over its plans to go public this year.
The turmoil comes against a backdrop of heightened U.S.-China tech tensions. On a Bitcoin World podcast, editors dissected a “recurring panic” triggered by Chinese AI releases, most recently Moonshot AI’s Kimi model. Sean O’Kane noted the pattern: “Many elements feel like repeats of prior freakouts,” where each new Chinese model that matches benchmark performance at lower cost sparks fears in Washington. The debate centers on open-weight models—like Kimi—that developers can inspect and modify. U.S. frontier labs OpenAI and Anthropic have lobbied regulators, raising security concerns, but critics see protectionism. As Anthony Ha pointed out, “The word ‘China’ adds a level of hysteria… arguments for aggressive regulation often serve pre-existing policy goals.”
This protectionist drive aligns with Beijing’s push for self-reliance. China has assembled a $48 billion semiconductor fund, and local chips from Huawei and Alibaba are gaining traction. Meanwhile, Trump administration officials have dangled Nvidia’s restricted H200 chip before Chinese firms, while Beijing urges tech companies to buy locally—even summoning them weekly to question purchases. Smuggling of Nvidia GPUs has surged, with black-market prices more than doubling. DeepSeek’s freeze, therefore, is more than a fundraising hiccup—it underscores the fragile intersection of capital, geopolitics, and the AI arms race.
