Samsung, SK Hynix Reject KEPCO’s $18.7 Billion Power Funding Plan

Samsung Electronics and SK Hynix have rejected a proposal from Korea Electric Power Corp. (KEPCO) that would require the chipmakers to provide 25 trillion won ($18.7 billion) in upfront funding to secure electricity supplies for South Korea’s planned semiconductor mega clusters.

According to a document submitted to South Korean lawmaker Lee Chul-gyu and shared with Reuters, both semiconductor companies informed the state-run utility that accepting the proposed arrangement would be difficult following internal reviews.

KEPCO reportedly sought the advance payment to help finance major power infrastructure needed for new semiconductor fabrication plants. South Korean newspaper Chosun Ilbo previously reported that the utility proposed collecting payments in advance for electricity that Samsung and SK Hynix are expected to consume at their future chip facilities.

However, the companies have questioned whether such a large upfront financial commitment is necessary. A company official in Seoul told Reuters that uncertainty surrounding the long-term sustainability of semiconductor demand was among the concerns influencing their position. The official requested anonymity because of the sensitivity of the discussions.

Samsung Electronics and SK Hynix declined to comment publicly on the proposal.

The disagreement highlights the enormous infrastructure requirements associated with South Korea’s push to expand its semiconductor manufacturing capacity. Advanced chip fabrication plants consume substantial amounts of electricity, making reliable power generation and transmission infrastructure critical to the development of large-scale semiconductor clusters.

South Korea is seeking to strengthen its position in the global semiconductor industry as demand for artificial intelligence chips, high-bandwidth memory and advanced computing hardware drives investment across the sector. Samsung and SK Hynix are two of the world’s largest memory chip producers and are central to the country’s semiconductor expansion strategy.

KEPCO, meanwhile, faces the challenge of financing the electricity infrastructure required to support new factories. The rejection of its 25 trillion won proposal could require the utility and South Korean authorities to explore alternative funding arrangements as construction of the planned chip clusters progresses.