South Korean AI chip startup Sapeon is raising new funding round at $400 million valuation to challenge Nvidia

The AI race is here and companies like OpenAI and Microsoft are going to need a new generation of AI chips to meet the computational demands. While companies like Nvidia, AMD, and Intel are currently dominating the AI chip market with chips used for artificial intelligence, new breeds of AI chip startups are raising millions in funding to challenge the chip giants. Two of these companies are South Korean startups Sapeon and Rebellions.

Sapeon is a South Korean artificial intelligence chip startup that spun out of its parent company, SK telecom. Based in California, Sapeon (a compound word of “SAPiens,” which means mankind, and aEON, which means eternal time) was created in 2016 inside SK Telecom, one of South Korea’s biggest telecommunications firms. Last year, SK Telecom spun out Sapeon and raised outside investment.

Now, Sapeon is raising a new funding round that puts its valuation above $400 million, CEO Soojung Ryu told CNBC in an interview. The startup is currently backed by high-profile South Korean firms including SK Telecom, memory-chip maker SK Hynix and SK Square, an investment company spun off from SK Telecom.

Sapeon CEO Soojung Ryu (Credit ET News)

Ryu is a well-known expert in AI processors with more than 25 years of extensive experience in leading various projects related to NPU and GPU. Before she joined SK Telecom as the head of the AI accelerator office, Ryu was a University-Industry Collaboration Professor at Seoul National University, where she conducted R&D in the NPU and PIM. When she served as the Vice President of Samsung Group’s R&D hub, she undertook diverse projects related to GPU. Ryu received her Ph.D. degree in Electrical & Computer Engineering from the Georgia Institute of Technology, the company said on its website.

Sapeon designs AI-powered semiconductors for data centers. Unlike traditional chips, these AI chips are required for AI applications that require huge amounts of data processing. Sapeon and established players like AMD are looking to challenge Nvidia and get a piece of the AI chip market share.

In an interview at the Mobile World Congress that aired Wednesday, Ryu told CNBC that “AI solutions will grow a lot thanks to the evolution of AI services like ChatGPT. We would like to build this kind of system (AI chips) to have an opportunity for the business.”

Meanwhile, Sapeon appears to be making some inroads. In September, the startup claimed its SAPEON X220 has the highest level of performance in the latest MLPerf benchmark test and performed 2.3 times faster than A2, NVIDIA’s latest GPU, in a data center inference benchmark.

“Despite being a low-cost device that uses the 28nm process, SAPEON X220 achieved performance superior to competitors that utilize the most recent semiconductor process technology,” Sapeon said in a statement.