BEIJING, March 19 (Reuters) - Chinese AI startup Zhipu AI has secured 300 million yuan ($41.5 million) in investment from a Chengdu government-backed fund, state media, the Beijing News reported on Wednesday, in the latest move by Chinese cities to support domestic AI development.

The investment from Chengdu Hi-Tech Industrial Development Zone follows two funding rounds secured by Zhipu from various local governments this month, as cities ramp up support for AI firms amid intensifying competition with the United States.

The Beijing-based startup also secured 500 million yuan from Zhuhai city's state-owned Huafa Group last week, while Hangzhou City Investment Group Industrial Fund participated in a separate 1 billion yuan funding round earlier this month.

The flurry of state-backed investments comes as domestic rival DeepSeek has drawn attention in China's AI sector, with its large language models achieving performance comparable to Western competitors at lower costs.

Zhipu AI, founded in 2019 and widely known as one of China's "AI tigers," has attracted investment from tech giants Tencent, Meituan, and Xiaomi, across more than 15 funding rounds, according to business registration platform Qichacha.

The company was valued at 20 billion yuan in a funding round in July 2024, according to Qichacha.

As part of the latest investment, Zhipu will partner with Chengdu to develop a regional AI model for Sichuan province, dubbed "Zhipu Zhuge," and build AI infrastructure including a model training center and research facility in the city, Beijing news reported.

In January, Zhipu and its subsidiaries were added to the U.S. Commerce Department's export control entity list, barring it to procure U.S. components.

($1 = 7.2355 Chinese yuan renminbi)

(Reporting by Liam Mo and Brenda Goh; Editing by Sonia Cheema)

((liam.mo@thomsonreuters.com;))