Rebellions and Sapeon to merge for Korea's AI chip triumph

Korea's two leading AI chip designers, the startup Rebellions and SK-founded Sapeon, agreed to merge in an effort to take advantage of a golden opportunity.

Rebellions' ATOM chip is deployed on kt cloud's system. [KT]

Rebellions and Sapeon, Korea's two leading AI chip designers, have agreed to merge in a monumental decision to put together their resources to challenge the likes of Nvidia in the AI chip race.

The two companies concurred that the next two to three years offer a golden opportunity for Korea to take the lead in the competitive AI chip sector, concluding that they should jointly form a new entity in a speedy manner.

The new entity is expected to be established in the third quarter of this year after going through due diligence and a shareholder agreement process.

Rebellions will be responsible for the management of the new entity as its structure as a startup makes it more suitable to respond agilely in the fast-paced industry of semiconductors. Sapeon is a subsidiary of SK Telecom, 62.5 percent of which was held by the telecommunications giant as of last year.

Sapeon CEO Ryu Soo-jung will step down while Rebellions CEO Park Sung-hyun is likely to take the helm of the new entity.

The name of the new entity as well as how the two companies' product portfolio will be restructured have not yet been confirmed.

Rebellions and Sapeon are considered two major AI chip-designing companies in Korea, both specializing in neural processing unit AI accelerators.

Rebellions, co-founded by CEO Park, reached a valuation of 880 billion won ($639 million) after completing its Series B funding early this year, with 280 billion won secured through the first two rounds of funding. Korea's second-biggest telecom company, KT, is its biggest shareholder and a strategic investor.

Sapeon, founded by a consortium of SK Telecom, SK hynix and SK Square, spun off as a separate entity in 2022 and raised 60 billion won in its Series A funding, bringing its valuation to over 500 billion won.

SK Telecom and KT have agreed on the formation of a merged entity in a push to establish a world-leading AI chip company from Korea.

How the two companies will untangle a complicated web of overlapping partners remains to be seen.

Rebellions has a close relationship with Samsung Electronics, deploying the electronics giant's HBM3E chips on its flagship REBEL chip, currently in development, and is planning to contract manufacture it at Samsung Electronics' Texas fabrication plant.

Sapeon, on the other hand, is partnering with SK hynix and TSMC for memory chip supply and contract manufacturing services.

The unlikely alliance of the two companies comes as Korea remains a minor player in the realm of logic processors compared to its solid lead in memory chips.

Korea's share in the logic processor market by revenue stood at 3.3 percent in 2022, according to data compiled by Korea Institute for Industrial Economics & Trade.

The Yoon Suk Yeol administration has pledged to increase that to a 10 percent share by 2030.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]