The Chinese tech sector is abuzz with anticipation over DeepSeek, an AI startup, as the industry awaits the potential release of its long-delayed V4 model this week. Market participants are particularly interested in whether the new model will be trained on domestic chips, which would signal significant progress for China's homegrown chipmakers in overcoming U.S. technology restrictions [1].
DeepSeek is reportedly seeking external funding for the first time, with The Information noting that the company was valued at $10 billion a few days ago. However, more recent reports indicate that Alibaba and Tencent are in talks with DeepSeek regarding an investment at a $20 billion valuation [1]. Despite this, a senior executive from one of the companies involved clarified that discussions are still at a very early stage and no deep negotiations have occurred yet. The executive also noted that some parties are interested in boosting DeepSeek's valuation [1].
The market's reaction to these developments has been notable, with Alibaba's ADR experiencing a slight increase following the investment news, reflecting high expectations for DeepSeek's upcoming V4 model [1]. DeepSeek was founded by Liang Wenfeng, who previously established the quantitative hedge fund High-Flyer Quant. While High-Flyer Quant's profitability and cash flow supported DeepSeek's early model training, the exponential growth in model size and data scale means that further development, such as V4, will require substantial external funding to keep pace with both domestic and international competitors [1].
The outcome of DeepSeek's V4 model release remains uncertain, but the ongoing demand for advanced chips is expected to drive record results for companies like SK Hynix and Taiwan Semiconductor Manufacturing Co. (TSMC) [1].
CONCLUSION
DeepSeek's potential V4 model release and its reported $20 billion valuation talks with Alibaba and Tencent have generated significant market excitement, as evidenced by a rise in Alibaba's ADR. The event underscores the growing demand for advanced chips and highlights the competitive landscape in China's AI sector.