Chinese artificial intelligence high-flier DeepSeek is expected to close its first external financing round soon, boosting its valuation to up to US$50 billion, according to three people familiar with the matter, as the country’s marquee state-backed investment vehicle joins in bankrolling what is seen as a national technology champion.

The round was being backed by a group of state-linked investors, including AI-focused affiliates under the third phase of the China Integrated Circuit Industry Investment Fund, known as the “Big Fund III”, the people said, requesting anonymity because the information is private.

Global investment firm Hillhouse was also involved in the funding discussions, the people said. Shenzhen-based video gaming and social media giant Tencent Holdings took part in the round too, they added.

The final valuation could still change as talks were ongoing, the people said.

DeepSeek, the Big Fund, Tencent and Hillhouse did not immediately respond to a request for comment.

The latest valuation – five times the initial US$10 billion value local media outlets reported last month when the Hangzhou-based frontier AI lab started the funding round – reflects the interest of some of China’s largest state-backed investors and underscores the company’s growing importance in the intensifying race between the US and China for AI leadership.