Xiaomi, the world's third-largest smartphone manufacturer in Q1 2021, has set its eyes on entering the electric car market. With that, the Chinese smartphone giant is looking to invest in the technologies required to run electric vehicles.
In line with that business strategy, Xiaomi is allegedly mulling over participating in a $231 million investment round for Black Sesame Technologies, Inc., according to anonymous sources, Bloomberg reports.
Black Sesame, a company based in Shanghai specializing in artificial intelligence (AI) and chips for autonomous driving, could be valued up to $1.5 billion once the fundraising round is completed.
Apart from Xiaomi, Tencent Holdings Ltd., a China-based multinational technology company, has already backed Black Sesame in its previous investment round, the sources claim.
Representatives from Xiaomi, Black Sesame, and Tencent declined to release a statement amid the investment talks.
Black Sesame has been taking into account an IPO (initial public offering) in the Shanghai Stock Exchange STAR Market--China's equities market focusing on science and technology--next year. The company, however, still needs another investment round before going to IPO.
Xiaomi's possible deal with Black Sesame would mark the smartphone maker's next move as it drives closer toward the EV market after billionaire co-founder Lei Jun disclosed a $10 billion plan to manufacture EVs over the next decade in March, as per BBC.
Apart from Xiaomi, Apple and Huawei are the two other smartphone makers that have expressed their interest in joining the automotive industry, foreseeing that future cars will become more autonomous and connected, thanks to 5G and upcoming mobile network standards such as 6G.
Currently, Tesla, spearheaded by its founder and CEO Elon Musk, has been at the forefront of self-driving EV space with its lineup of electric car models such as the Model S and the Model X.
Using the same business strategy for its successful smartphone models, Xiaomi could outsource car manufacturing to contractors.
What Is Black Sesame?
Established in 2016, Black Sesame is an AI company focusing on system-on-a-chip (SoCs) design, perception algorithms, and image processing, according to its website. Eighty percent (80%) of the company's 300-employee workforce is dedicated to research and development (R&D).
Black Sesame has business relationships with auto industry companies, namely Chinese automakers BYD Auto Co., Ltd., and SAIC Motor Corporation Limited, as well as the more established Robert Bosch GmbH of Germany.
China has a growing number of Chinese tech giants and chipmakers needing capital to develop and create semiconductors employed in AI algorithms.
Besides Black Sesame, other AI chipmakers in China include Enflame and Horizon Robotics Inc. The two companies were able to raise $1.2 billion during Q1 2021 along, according to Bloomberg New Energy Finance Limited (BNEF).
China is determined to bolster its local semiconductor industry and lessen its dependence on American technology amid the sanctions imposed by the United States government under the previous Trump administration. Sanctions are unlikely to change despite the election of President Joe Biden.
The current AI chip market worldwide is dominated by American technology companies, namely Amazon, Google and NVIDIA.
AI chip demand tremendously increased in recent years, driven by cryptocurrency mining, graphically rich video games, and other data-intensive applications.
