In a significant move to bolster South Korea's position in the global artificial intelligence (AI) chip market, SAPEON Korea and Rebellions Inc have signed a definitive merger agreement.

The deal, announced on Sunday, marks a strategic consolidation in the country's AI semiconductor industry.

SAPEON Korea, established by SK Telecom, and Rebellions, a startup founded in 2020, agreed to merge based on an equity value ratio of 1:2.4. The newly formed entity, which will retain the name 'Rebellions', is expected to launch later this year under the leadership of Rebellions' current chief executive officer, Park Sung-hyun.

The merger aims to combine SAPEON's expertise in high-performance AI semiconductors with Rebellions' rapid innovation in chip development. SAPEON introduced South Korea's first AI semiconductor for data centres in 2020, while Rebellions has launched two AI chips within three years and secured over $225 million in funding.

To ensure management stability, SAPEON's current shareholders – SK Telecom, SK Square, and SK Hynix – will sell three per cent of their SAPEON shares prior to the merger. Post-merger, SK Telecom will remain a strategic investor, supporting the company's global expansion efforts.

Ryu Young-sang, chief executive officer of SK Telecom, stated, "Signing this agreement will greatly enhance our global position in AI semiconductors, one of the key parts of the AI value chain we're developing."

The merger represents South Korea's latest attempt to challenge global AI chip leaders such as Nvidia. It comes at a time of intense competition in the AI semiconductor market, with companies worldwide vying for dominance in this critical technology sector.

Park Sung-hyun expressed ambition for the merged entity, saying, "Our goal now is to emerge as a leading force in the worldwide AI chip market, navigating the intense industry competition."

The consolidation is seen as a crucial step in extending South Korea's semiconductor leadership beyond memory chips into logic chips and AI. With their combined capabilities in neural processing unit development, the new company is poised to compete more effectively on the global stage.

The merger is expected to complete within the year, subject to customary closing conditions and regulatory approvals.

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