(Bloomberg) — Mobile phone giant Xiaomi Corp. is among investors considering joining a funding round of at least 1.5 billion yuan ($231 million) for Black Sesame Technologies Inc., according to people familiar with the matter.The fundraising would value the Shanghai-headquartered artificial intelligence and autonomous driving chipmaker at as much as $1.5 billion, the people said, asking not to be identified as the matter is private. Black Sesame’s backers in its previous funding round included Tencent Holdings Ltd., one of the people said.Black Sesame is considering an initial public offering on China’s technology-focused Shanghai Star board as soon as next year, according to the people. At least one more round of investment is planned before any potential IPO, they said.Xiaomi has invested billions in scores of startups to build out its smartphone and online ecosystem, but a deal with Black Sesame would mark the company’s latest bet on the automotive arena since announcing a $10 billion plan to build electric vehicles. The startup, which designs AI chips and systems for cars, counts major auto industry firms including Robert Bosch GmbH, SAIC Motor Corp. and BYD Co. among its clients, according to its website.Details of the fundraising such as size and valuation could change, the people said, while discussions of the IPO are at an early stage and the company could decide not to pursue a listing. Representatives for Black Sesame, Tencent and Xiaomi declined to comment.The investment talks come as Xiaomi plans to invest $10 billion over the next decade into manufacturing EVs, its billionaire co-founder Lei Jun announced last month. The Chinese smartphone maker joins tech giants from Apple Inc. to Huawei Technologies Co. in targeting the vehicle industry, betting future cars will grow increasingly autonomous and connected. Xiaomi will outsource car assembly to contract manufacturers, a model it uses for its smartphones, a person familiar with the matter has said.Founded in 2016, Black Sesame is an artificial intelligence company focused on image processing, perception algorithms and system-on-a-chip design, according to the website. It has about 300 employees, 80% of whom work in research and development, the site shows.The startup is one of a growing number of Chinese chipmakers and tech giants seeking capital to develop semiconductors used to train AI algorithms. Artificial intelligence chip companies in China such as Horizon Robotics Inc. and Enflame raised $1.2 billion in the first quarter alone, BNEF estimates.China has pledged to grow its domestic semiconductor industry and reduce its reliance on American technology. Demand for semiconductors capable of handling AI tasks such as machine learning has sharply increased in recent years, fueled by a boom in data-intensive applications including high-resolution video games and cryptocurrency mining. The global AI chip market is currently led by Nvidia Corp., while the likes of Amazon.com Inc. and Alphabet Inc.’s Google have also invested in their own bespoke server silicon.(Updates with Tencent response in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.