Two South Korean chip makers, Rebellions and Sapeon Korea, have finalized a merger in an effort to become the country’s leading AI chip company.

The financial terms of the deal have not been disclosed and the merger is still subject to the necessary due diligence and shareholder approval.

The deal is expected to be finalized in the third quarter of 2024, with the new integrated company due to launch before the end of the year.

Sapeon Korea was spun out of SK Telecom in 2016 and unveiled its next-generation X330 AI chip in November 2023. That same year, fabless AI semiconductor startup Rebellions began mass-producing its Atom NPU to run large language models (LLM) in the data center.

In a statement, SK Telecom said it would be a “strategic investor” in the new company and, alongside Sapeon’s other shareholders, SK Square, and SK Hynix, planning to “actively support the merged company's entry into the global AI semiconductor market and improvement of Korea's AI semiconductor competitiveness.”

It added that the two companies had decided to move ahead with the merger as they both believe the next two to three years would be a “golden time” for South Korea and the role the country has to play in the global AI semiconductor market.

SK Hynix is the world’s second-largest memory chipmaker and the primary supplier of HBM to Nvidia for the chip designers’ GPUs.

In April, the company reported its first profitable quarter since 2022, citing the growing demand for AI memory technology in addition to increased sales of enterprise solid state drives (eSSD) for use in on-premises AI data centers for helping to boost the company’s DRAM and NAND businesses.

That same month, SK Hynix also announced its plan to build a new 5.3 trillion won ($3.86 billion) DRAM chip fab in South Korea, near its existing production base in Cheongju. Construction at the new plant has already begun, with the company aiming for a November 2025 completion date.