DeepSeek’s first-ever round of external funding could value the Chinese AI start-up at $45 billion (£33bn), as the country’s largest state-backed semiconductor investment vehicle, the China Integrated Circuit Industry Investment Fund or “Big Fund”, engages in talks to lead the round, the Financial Times reported, citing unnamed people familiar with the matter.

Earlier reports said that Tencent Holdings and Alibaba Group are also in talks to take part in the round.

DeepSeek’s valuation for the round has grown rapidly since it began talks a few weeks ago, when it initially sought a valuation of a minimum of $10bn.

As of late April the figure had reportedly risen to $20bn.

Investors are reportedly betting on the start-up’s potential although it is focused on developing frontier models, rather than broad commercialisation, as are Chinese rivals such as Moonshot and Hong Kong-listed Zhipu, which is currently valued at around $52bn.

The Big Fund has backed significant semiconductor firms such as contract chipmaker SMIC and memory manufacturer YMTC.

The investment in DeepSeek comes as the Chinese government is urging domestic tech players to work together to create an integrated ecosystem around AI that can compete with US products.

DeepSeek said at the launch of its latest V4 model that the software was optimised to run inference on Huawei’s Ascend 950PR chips, seen as a significant boost for China’s tech independence efforts.

Huawei has overtaken Nvidia in market share in China, as Nvidia’s advanced products remain largely unavailable in the country due to regulatory restrictions from either the US or China.