Key Takeaways
- Korea Electric Power Corp’s proposal for $18.7 billion in upfront power payments has been declined by Samsung Electronics and SK Hynix
- Samsung would have contributed approximately 20 trillion won while SK Hynix’s share was estimated at 5 trillion won
- Both semiconductor manufacturers expressed concerns about unpredictable long-term chip market demand
- KEPCO now faces challenges in securing alternative funding sources for semiconductor cluster power infrastructure development
- Stock prices dropped significantly in Seoul trading, with Samsung declining 3.7% and SK Hynix falling 5.3%
In a significant setback for South Korea’s power infrastructure planning, Samsung Electronics and SK Hynix have declined to participate in Korea Electric Power Corp’s ambitious proposal that sought 25 trillion won—approximately $18.7 billion—in advance payments to finance electricity infrastructure for upcoming semiconductor manufacturing facilities across the nation.
KEPCO, the government-controlled electricity provider, had pitched this advance payment structure as a mechanism to secure funding for power infrastructure connected to new chip production facilities. The utility company intended to use these prepayments to accelerate construction of the electrical systems required by expanding semiconductor operations.
Details of the Rejected Proposal
According to the plan’s terms, Samsung was expected to provide roughly 20 trillion won, with SK Hynix contributing an additional 5 trillion won. KEPCO positioned this funding mechanism as essential for accelerating infrastructure development aligned with South Korea’s strategic goals to strengthen its position in global semiconductor manufacturing.
Following careful evaluation, both corporations informed KEPCO that accepting the proposal would not be feasible. An industry source based in Seoul, who requested anonymity given the delicate nature of ongoing discussions, indicated that the chipmakers questioned whether such substantial advance commitments were warranted.
The primary obstacle centered on unpredictability surrounding sustained semiconductor market demand. Given the industry’s historical pattern of alternating between expansion and contraction periods, both manufacturers demonstrated reluctance to lock in multi-billion dollar commitments predicated on demand forecasts that may not materialize.
Stock Market Impact
Financial markets reacted swiftly once the rejection became public knowledge. Samsung Electronics shares decreased by 3.7% during Monday trading sessions in Seoul. SK Hynix experienced a more pronounced decline, with shares dropping 5.3% the same day.
The information regarding the proposal’s rejection was provided to Reuters through South Korean lawmaker Lee Chul-gyu’s office. When contacted for official statements, representatives from both Samsung Electronics and SK Hynix declined to provide commentary on the situation.
South Korea confronts increasing electricity demands driven by semiconductor production expansion and growing artificial intelligence infrastructure requirements. With the chipmakers’ rejection of KEPCO’s funding proposal, the utility company lacks a definitive strategy for financing the infrastructure enhancements it deems critical.
KEPCO faces the challenge of identifying alternative funding mechanisms or restructuring the arrangement in ways that might prove more acceptable to the semiconductor manufacturers.
Earlier this month, the Chosun Ilbo newspaper in South Korea had reported on KEPCO’s efforts to advance this prepayment concept, presenting it as a solution for constructing power infrastructure on timelines that match the chipmakers’ expansion schedules.
As of September 14, 2026, no modified proposal has been formally presented.
The post Samsung and SK Hynix Reject KEPCO’s $18.7B Power Infrastructure Prepayment Deal appeared first on Blockonomi.
