The unrelenting demand for AI data centers is spilling over into lesser-known companies that supply components for essential tasks such as cooling chip servers.

Phononic, a 17-year-old company whose semiconductor components prevent overheating in AI data centers, is hoping to cash in on that demand. The Durham, N.C., company is talking to potential buyers and has discussed a valuation of at least $1.5 billion, according to people familiar with the discussion. It’s been working with investment bank Lazard since early this year to evaluate its options, said one of the people.

That price would more than double its valuation from its last private financing, adding to a string of high-priced acquisitions for industrial companies tied to the AI boom. Terms of the deal are still being discussed, and the company may choose to raise more capital instead of proceeding with a sale.