Key Points
- Two of South Korea’s largest semiconductor manufacturers, Samsung Electronics and SK Hynix, have declined an advance electricity payment proposal from Korea Electric Power Corp (KEPCO) totaling $18.7 billion
- Under the proposed arrangement, Samsung would have contributed approximately 20 trillion won, while SK Hynix’s share would have been around 5 trillion won
- Both companies cited unpredictable long-term demand patterns in the semiconductor industry as the primary factor behind their decision
- KEPCO now faces the challenge of identifying alternative financing methods for power infrastructure supporting South Korea’s chip manufacturing expansion
- Stock prices for Samsung declined 3.7% while SK Hynix fell 5.3% in Seoul trading after the announcement
Two leading South Korean chipmakers, Samsung Electronics and SK Hynix, have rejected an unprecedented financial proposal from Korea Electric Power Corp that would have required them to make combined upfront payments totaling 25 trillion won—approximately $18.7 billion—to finance electrical infrastructure for their upcoming semiconductor production facilities across South Korea.
Korea Electric Power Corp, the nation’s government-controlled electricity provider, initiated the proposal. The utility sought these advance payments to fund electricity expenses associated with upcoming chip manufacturing facilities, utilizing the capital to construct the necessary power infrastructure for these operations.
Details of the Proposed Agreement
According to the plan’s structure, Samsung was expected to provide roughly 20 trillion won, with SK Hynix contributing an additional 5 trillion won. The objective was to enable KEPCO to accelerate infrastructure construction as South Korea implements its strategy to broaden semiconductor production capabilities.
Following comprehensive internal assessments, both corporations informed KEPCO that accepting the proposal would be problematic. An unnamed corporate representative in Seoul, speaking confidentially given the delicate nature of the discussions, indicated that both firms questioned whether such substantial advance payments were warranted.
The primary obstacle centered on unpredictability surrounding sustained semiconductor market demand. Given the chip sector’s historical pattern of alternating between growth spurts and downturns, both manufacturers appeared hesitant to commit billions of dollars based on forward-looking estimates.
Stock Market Impact
Financial markets reacted swiftly to the development. Samsung’s share price decreased 3.7% during Monday’s Seoul trading session. SK Hynix experienced a steeper decline of 5.3% that same day.
The documentation confirming the rejection was provided to Reuters through South Korean legislator Lee Chul-gyu’s office. Neither Samsung Electronics nor SK Hynix provided official statements regarding the situation.
South Korea continues to grapple with escalating electricity requirements driven by semiconductor production expansion and the proliferation of artificial intelligence infrastructure. The chipmakers’ rejection of KEPCO’s proposal eliminates one potential avenue for the utility provider to secure funding for what it characterizes as essential infrastructure enhancements.
KEPCO must now explore alternative financing mechanisms or develop a modified agreement structure that might prove more acceptable to the semiconductor manufacturers.
South Korea’s Chosun Ilbo newspaper had previously reported this month that KEPCO was advocating for the advance payment concept, positioning it as a mechanism to ensure power infrastructure completion ahead of the chipmakers’ expansion schedules.
As of September 14, 2026, no updated proposal has been publicly disclosed.
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