DeepSeek Founder's Remarks Leaked, Fundraising Suspended
Taylor Wilson
DeepSeek has paused its second funding round after founder Liang Wenfeng's closed-door comments — including a reference to buying 'non-compliant' chips — leaked online; one sentence may now draw both regulatory scrutiny and investor retreat.
What exactly did he say, and why did it blow up?
At a closed-door investor meeting on May 20, Liang Wenfeng said: "For us, we can buy some non-compliant cards."
He did not name the chip model, supplier, procurement channel, or the specific rules he meant.
The meeting transcript was uploaded to GitHub on July 22 and spread online. This means → a remark aimed at a handful of investors became a public regulatory target.
Why is the funding paused — and can it resume?
DeepSeek representatives verbally told some prospective investors that no agreements will be signed in the near term, though discussions continue.
Bloomberg reported the pause stems partly from Liang's frustration that his remarks were circulated online.
DeepSeek had been seeking a valuation of roughly ¥500 billion (~$74 billion); its first external round was about $7.4 billion. In plain terms = the money didn't fall apart — trust did. Whether the pause lifts depends on whether regulatory and public pressure cool down.
How far behind is DeepSeek on compute?
Liang estimated DeepSeek currently holds compute equivalent to roughly 20,000 Nvidia H-series processors, with most hardware only recently delivered or still being installed.
He said that even spending ¥50 billion (~$7 billion) would not be enough to train a model matching the largest U.S. systems — that would require roughly 50,000 Nvidia GB300 processors or 200,000 Huawei Ascend 950 processors.
This means → DeepSeek's current hardware is an order of magnitude short of what "catching the U.S. leaders" would take.
How wide is the China–U.S. AI gap?
Liang estimated Chinese developers have roughly one-twentieth the compute resources of their U.S. counterparts, lagging one to two years overall.
He argued Chinese firms can outperform U.S. rivals on specific tasks through engineering efficiency, but cannot achieve broad superiority given the hardware gap.
Put simply = you can ace individual subjects, but you can't win the overall exam when you have far less paper and fewer pens.
What is the U.S. investigating?
The U.S. House Select Committee on the CCP said in April that DeepSeek appeared to have used tens of thousands of Nvidia processors restricted from export to China, and requested procurement records from Nvidia CEO Jensen Huang.
The committee's investigation did not confirm that the "non-compliant" processors Liang mentioned were Nvidia products, nor did it identify how they were obtained.
The U.S. Commerce Department's Bureau of Industry and Security issued guidance on May 31 requiring export licenses for certain advanced computing products sold to China-based companies, even if the direct recipient is in a third country. This reflects Washington closing the "detour procurement" loophole — and Liang's remarks landed right in its crosshairs.
Content is for reference only, not financial advice.