"The Hangzhou AI lab has told prospective investors in its second fundraising round that it is suspending the deal, people familiar with the matter told Bloomberg on Saturday, days after remarks attributed to founder Liang Wenfeng about US-China AI competition circulated widely online."
And:
"Tencent's technology outlet published a 118-item version covering AGI strategy, chip supply, pricing, and retention. In it, Liang reportedly framed China's disadvantage as an arithmetic problem rather than a talent one: "The biggest gap between us and the US is in resources.""
"The specifics were unusually candid. Liang is said to have told investors he needed 200,000 Huawei 950 chips to train a frontier model but received 16,000, adding that "Huawei's problem is still insufficient capacity" and expecting the crunch to last at least three years. He also floated narrowing the gap with US labs to three to six months using a fraction of their computing."
I think the way to parse the current title "DeepSeek pause fundraise after comments on compute gap to US leaked (transcript) [pdf]" is that there was a leak that DeepSeek will pause fundraising because they perceive there is a compute gap with the US.
I am also guessing that the majority of the people who read this title will think that DeepSeek is pausing this fundraising because some comments they made about the compute gap were leaked. That is not the case.
Perhaps there is an opportunity for China to close the compute gap by renting compute from hyperscalers through a complex web of shell entities similarly to how the US procured titanium for the SR-71 during the Cold War.
> Objectively speaking, if I can spend two billion this year, it would indicate that our procurement department has achieved outstanding performance. The main gap between us and the United States lies in resources, while the disparity in personnel is minimal—there is virtually no difference, as we are essentially the same team of people, possibly from China.
> With the largest models available today, we simply cannot afford to train them
It seems they're largely talking about literally purchasing NVIDIA H200 chips. Important context is that Trump first started the trade war with China largely focusing on banning anything that could improve the Chinese domestic semiconductor industry. It was a blatant attempt to prevent China from progressing up the value chain to high tech. China's response is the reason they went from a miniscule player in EVs to the world's largest manufacturer (same for other high tech industries like LIDAR, solar, etc). In his second term, Trump blocked NVIDIA from selling chips to China. China again responded with astounding progress on their domestic semiconductor industry which led to Trump backing down on the ban. However, China shocked everyone by banning their own companies from buying NVIDIA in order to support the domestic semiconductor industry. Obviously China is still years away from EUV but it now produces most of its own >14nm chips and is rapidly growing
Here's something I really don't understand: If as alleged Chinese open weight models are catching up with US anyway, and the performance is near US frontier model level but Chinese can do it with a fraction of cost, and eventually AI model will be commodified, wouldn't that means that the billion or even trillion dollars that US labs spend have only diminishing returns and the lead is only temporary?
So why Deepseek also want to go down that route? Is having the absolute frontier really that important, given that the performance difference is just transient and costly?
If this is true it almost sounds like DeepSeek is following the Anthropic playbook of trying to pressure the local government into aligning with their corporate agenda through scare tactics. So I wouldn't be surprised if Liang Wenfeng "disappears" for a little while from the public eye in a few weeks.
Curious what the fundamental limit on Huawei's capacity is. China has shown if nothing else they know how to scale when they want to. If it came down to just building more of what they know how to do, it would be happening. Is there more to it?
The production capacity constraint seems to come from SMIC who make the Ascend processors for Huawei. Huawei's memory comes from CXMT who seem to have plenty of capacity, with Apple looking to buy memory from them. Huawei then combines processors and memory into chiplets similar to what NVIDIA does with their GPUs.
The reason SMIC are capacity constrained is at least in part because they've been blocked from buying ASML's EUV machines, and are therefore having to make do with previous generation lower resolution DUV machines. These DUV machines can be coaxed into making surprisingly competitive 5-7nm chips, but at the expense of using many more production steps ("multi patterning") which limits productivity.
Give it 5 years for China to have it's own ASML. Nothing big bang is going to happen in 5 years or even a decade from now, execpt for a few more hypes, deep corrections and the political drama. AGI is not a destination, but a journey. There are no winners.
>> As you can understand, during V3 training, NVIDIA GPUs were still used, but the NVIDIA ecosystem was no longer employed.
Ironic that these large LLMs are eroding Nividia's moat. In the next paragraph he talks about Nvidia digging its own grave. I wonder if Nividia is aware of this and the frequent release cycle is a response to this development ?
I don't think his pitch when asking money from investors should mean too much for us. He wants the funds, and he needs to point to a deficiency that those funds should cover. We cannot know for sure but he may be exaggerating, or let's just say, talking strategically.
This is also me who wants to believe that we can make all this very efficient, so take my warning with a grain of salt.
The main goal is AGI, and the underlying prerequisite theme is continuous learning.
Everyone is trying to figure out how to achieve this prerequisite. I'm thinking of agent harnesses. That's what everyone is trying to do at this point.
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[ 30.8 ms ] story [ 75.2 ms ] threadhttps://www.cyberkendra.com/2026/07/deepseek-pauses-fundrais...
"The Hangzhou AI lab has told prospective investors in its second fundraising round that it is suspending the deal, people familiar with the matter told Bloomberg on Saturday, days after remarks attributed to founder Liang Wenfeng about US-China AI competition circulated widely online."
And:
"Tencent's technology outlet published a 118-item version covering AGI strategy, chip supply, pricing, and retention. In it, Liang reportedly framed China's disadvantage as an arithmetic problem rather than a talent one: "The biggest gap between us and the US is in resources.""
"The specifics were unusually candid. Liang is said to have told investors he needed 200,000 Huawei 950 chips to train a frontier model but received 16,000, adding that "Huawei's problem is still insufficient capacity" and expecting the crunch to last at least three years. He also floated narrowing the gap with US labs to three to six months using a fraction of their computing."
I am also guessing that the majority of the people who read this title will think that DeepSeek is pausing this fundraising because some comments they made about the compute gap were leaked. That is not the case.
https://theaviationgeekclub.com/in-1960s-russia-sold-titaniu...
https://nationalinterest.org/blog/buzz/titanium-russia-was-s...
> With the largest models available today, we simply cannot afford to train them
It seems they're largely talking about literally purchasing NVIDIA H200 chips. Important context is that Trump first started the trade war with China largely focusing on banning anything that could improve the Chinese domestic semiconductor industry. It was a blatant attempt to prevent China from progressing up the value chain to high tech. China's response is the reason they went from a miniscule player in EVs to the world's largest manufacturer (same for other high tech industries like LIDAR, solar, etc). In his second term, Trump blocked NVIDIA from selling chips to China. China again responded with astounding progress on their domestic semiconductor industry which led to Trump backing down on the ban. However, China shocked everyone by banning their own companies from buying NVIDIA in order to support the domestic semiconductor industry. Obviously China is still years away from EUV but it now produces most of its own >14nm chips and is rapidly growing
So why Deepseek also want to go down that route? Is having the absolute frontier really that important, given that the performance difference is just transient and costly?
The reason SMIC are capacity constrained is at least in part because they've been blocked from buying ASML's EUV machines, and are therefore having to make do with previous generation lower resolution DUV machines. These DUV machines can be coaxed into making surprisingly competitive 5-7nm chips, but at the expense of using many more production steps ("multi patterning") which limits productivity.
[1] https://aiproem.substack.com/p/must-read-deepseek-liang-wenf...
Ironic that these large LLMs are eroding Nividia's moat. In the next paragraph he talks about Nvidia digging its own grave. I wonder if Nividia is aware of this and the frequent release cycle is a response to this development ?
This is also me who wants to believe that we can make all this very efficient, so take my warning with a grain of salt.
there is just not enough resources right now, US sales block is working
Everyone is trying to figure out how to achieve this prerequisite. I'm thinking of agent harnesses. That's what everyone is trying to do at this point.
That's the same problem I'm trying to solve: https://github.com/rush86999/atom