Recent headlines make South Korea-based Artificial Intelligence (AI) chip design startup Rebellions a player to watch. First, it secured a series B funding of $124 million, led by KT, a Korean service provider and a data center company. Second, it is pursuing a merger with SK Telecom's Sapeon to build a global AI company from South Korea.
The merger is significant and will not only create South Korea's first chip unicorn but will also allow it to compete better globally, potentially challenging Nvidia's global dominance. Rebellions was valued at around $649 million in its recent funding round and Sapeon, which has SK Telecom as a majority shareholder, is valued at around $360 million. The merged company is likely to be launched within a year.
"This merger is the result of an agreement between the two companies to create a national company that will participate in the global AI infrastructure war through major integration between domestic AI semiconductor companies," according to a press release by SK Telecom.
Founded in 2020 by five South Korean engineers, Rebellions is a fabless chip company. Last year, it came into limelight when its AI chip, ATOM, performed better than Nvidia and Qualcomm in language and vision inference tests.
Growing the global footprint at Rebellions
The global AI market size is around $196.63 billion in 2023 and is likely to grow at a CAGR of 36.6% from 2024 to 2030, according to Grand View Research.
Earlier this year, Nvidia overtook Apple for a short time to become the world's most valuable company. The growing adoption of AI by enterprises in all industry verticals and regions is further likely to increase the market size. Nvidia specializes in developing Graphics Processing Units (GPUs), that are required for AI. It gained prominence once OpenAI's ChatGPT, which used Nvidia’s chips, revolutionized the market. Nvidia grew because of its first-mover advantage and its products are now used by several big tech companies, including Amazon, Meta and Google, among others.
“Nvidia's dominant position in AI chips is hard to shake. The merger of Rebellions and Sapeon has potential but faces challenges. Nvidia has the advantages of market share, technology accumulation, R&D investment, talents, software ecosystem and brand recognition,” said Galen Zeng, Senior Research Manager for Semiconductor Research at IDC Asia Pacific.
Now, Rebellions is looking to play a significant role in the global AI chip industry. "We are vigorously expanding into global markets, including Saudi Arabia, Japan, Southeast Asia, and the United States. Having recently secured funding from Aramco, the world's largest energy company, we anticipate new collaborative opportunities in the Saudi market," Rebellions Chief Financial Officer Sungkyue Shin told Fierce Electronics in an email. Aramco's venture arm, Wa'ed Ventures, has invested $15 million in Rebellions, which the company plans to use to set up a Saudi Arabia subsidiary to launch operations there.