Mobile phone giant Xiaomi is among investors considering joining a funding round of at least 1.5 billion Chinese yuan ($231 million) for Black Sesame Technologies. The fundraising would value the Shanghai-headquartered artificial intelligence and autonomous driving chip maker at as much as $1.5bn, sources told Bloomberg. Black Sesame is considering an initial public offering on China’s technology-focused Shanghai Star board as soon as next year. At least one more round of investment is planned before any potential IPO. Xiaomi has invested billions in scores of start-ups 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 $10bn plan to build electric vehicles. The start-up, which designs AI chips and systems for cars, counts major auto industry firms including Robert Bosch and Saic Motor among its clients, according to its website. Details of the fundraising such as size and valuation could change, the sources 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 and Xiaomi declined to comment. The investment talks come as Xiaomi plans to invest $10bn 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 to Huawei 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. Founded in 2016, Black Sesame has about 300 employees, 80 per cent of whom work in research and development, its website said. The start-up is one of a growing number of Chinese chip makers and tech giants seeking capital to develop semiconductors used to train AI algorithms. 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, fuelled 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, while the likes of Amazon and Alphabet’s Google have also invested in their own bespoke server silicon.