Rebellions sets stage for merger with SKT subsidiary Sapeon

[Courtesy of Rebellions Inc.]

SK telecom’s AI semiconductor subsidiary, Sapeon Korea Inc., is set to merge with AI semiconductor startup Rebellions Inc. The two companies aim to accelerate their international expansion and pursue an initial public offering (IPO) after founding a new entity.

SK telecom announced on Wednesday that Sapeon Korea and Rebellions agreed to merge. The companies plan to sign a formal merger agreement in the third quarter of 2024 and launch the integrated entity by the end of the year. Rebellions will manage the new company to swiftly respond to market conditions, with Rebellions CEO Park Sung-hyun taking the helm. Sapeon’s U.S. branch will remain separate for now, with its role moving forward still under review. The name and share distribution of the merged entity are yet to be determined, as the merger is still in its initial stages.

SK telecom will support the merged entity’s entry into overseas markets, with additional backing from Sapeon’s major shareholders, SK square and SK hynix.

The driving force behind the merger is the urgency to survive in a highly competitive field. AI semiconductors such as GPUs, optimized for AI calculations, are currently dominated by NVIDIA, which controls over 90 percent of the global market. Although Korean AI semiconductor companies like Rebellions and Sapeon have made efforts to increase their market shares, NVIDIA’s dominance has made it challenging to gain a foothold and the merger is seen as a strategic move to overcome this obstacle.

“We expect various merger synergies, including enhanced technology capabilities and economies of scale,” an official from Rebellions said.

KT, a strategic investor in Rebellions, also supports the merger and has invested a total of 66.5 billion won ($49 million) in Rebellions across two funding rounds.

“KT likely sees the merger as beneficial for the new entity’s performance and competitiveness, potentially aiding in the IPO process,” a telecom industry insider said.

Sapeon Korea was spun off from SK telecom’s internal R&D team in 2016 to focus on AI semiconductors. Rebellions, founded in 2020 by CEO Park Sung-hyun and CTO Oh Jin-wook, is an AI semiconductor fabless startup that has raised 277 billion won over the past three years, with a company valuation of 880 billion won.