South Korea’s fabless AI chip industry has experienced significant growth in recent years due to the high demand for hardware to power AI applications. In response to this demand, two prominent startups in the industry, Rebellions and Sapeon, have announced their merger in a strategic move to compete with global rivals like Nvidia.
The merged entity is expected to go public within the next two to three years, positioning itself as a leader in the South Korean fabless AI chip market. The companies believe that the next few years present a “golden time” for South Korea to gain a stronghold in the global AI chip market. This optimism is fueled by the increasing demand for neural processing units (NPUs), which the merged company plans to focus on strengthening after the merger.
This merger comes at a crucial moment in the global chip industry. Nvidia currently dominates the specialized AI chip market, accounting for over 97% of the global market share. However, companies like Rebellions and Sapeon see an opportunity to break away from their dependence on Nvidia and capitalize on the rising demand for AI hardware. Major tech players like Apple, Google, Amazon, and Microsoft are already developing their own chips for AI applications, signaling a shift away from reliance on Nvidia.
Looking ahead, Rebellions and Sapeon will commence due diligence and aim to finalize the merger in the second half of 2024. The Rebellion team will lead the management of the business, and all employees from both companies will join the new entity. Stakeholders such as SK Telecom, KT, and SK Hynix will continue their involvement in the merged company, ensuring support from major telecommunications and memory chip companies in South Korea.
The partnership between Rebellions and Samsung Electronics, which currently utilizes Samsung’s fabrication process for Rebellions’ AI chips, is uncertain following the merger. However, Rebellions’ previous collaboration with KT for its datacenter-focused AI chip, Atom, will continue as KT has incorporated Atom into its cloud-based NPU infrastructure.
Rebellions, founded in 2016 and spun out from SK Telecom in 2022, recently raised $124 million in a Series B funding round. On the other hand, Sapeon, established in 2022, focuses on building NPU hardware and full-stack software and raised over $45 million in a Series A round in August 2023.
Overall, the merger between Rebellions and Sapeon represents a significant development in South Korea’s fabless AI chip industry. By combining their resources and expertise, the merged entity aims to compete with global giants like Nvidia and capitalize on the growing demand for AI hardware. This move also reflects the broader trend of tech companies seeking to develop their own chips and reduce dependence on existing market leaders.