Samsung, SK Hynix Turn Down KEPCO's $18.7 Billion Power Prepayment Plan

Samsung Electronics and SK Hynix have declined a proposal from Korea Electric Power Corp (KEPCO) that would have required them to pay 25 trillion won (about $18.7 billion) in advance to support electricity supplies for planned semiconductor mega clusters.

The two chipmakers conveyed their decision to the state-run utility after conducting internal reviews, according to a document submitted to lawmaker Lee Chul-gyu. The document was shared with the media by his office.

A company official in Seoul said the firms were not convinced that such large upfront payments were warranted, pointing to uncertainty over how long semiconductor demand would remain strong. The official spoke on condition of anonymity because of the sensitivity of the matter.

Both Samsung Electronics and SK Hynix declined to comment on the matter.

South Korean newspaper Chosun Ilbo reported earlier this month that KEPCO had asked the chipmakers to make the advance payment for electricity expected to be consumed by new chip fabrication plants. The utility wanted the funds to invest in infrastructure needed to power those facilities.

The rejection leaves unresolved the question of how the power infrastructure for the semiconductor clusters will be financed.