Sapeon, a fabless startup backed by South Korean telecom-to-chip conglomerate SK Group, said Friday it would develop a new semiconductor optimized for on-device artificial intelligence as the market has been witnessing significant growth in recent years.

The company said it was selected to get support to develop prototypes for commercializing AI chips with edge AI, IoT and embedded computing firm Advantech Korea under the project dubbed Compass, run by the state-run government research institute Korea Planning & Evaluation Institute of Industrial Technology.

"We will strengthen the semiconductor ecosystem by securing Korea's highest level of AI technology capabilities and infrastructure," Sapeon CEO Ryu Soo-jung said.

The system semiconductor prototype production support project matches companies with demand in the system chip industry with chip suppliers and provides development expenditures.

Under the project, the two firms will target the high-powered edge AI computing market. Edge AI is the combination of edge computing and AI which runs machine learning tasks directly on connected edge devices to make processes faster without connecting to the cloud or offsite data centers.

Sapeon will develop an edge server card using its existing data center-based AI chip technology development capabilities while Advantech will take charge of developing an edge server equipped with the SK-backed fabless firm's chips.