S. Korea's 2 major chipmakers reject KEPCO's proposal to prepay 5 yrs of electricity bills

South Korea's two leading chipmakers, Samsung Electronics and SK hynix, have declined a proposal from state-run Korea Electric Power Corp. (KEPCO) to prepay five years of electricity bills, according to industry sources. The debt-stricken KEPCO had suggested that Samsung Electronics pay 20 trillion won ($14.8 billion) and SK hynix 5 trillion won upfront, equivalent to approximately five years of electricity costs based on the companies' payments from the previous year.

Both companies reportedly informed KEPCO of their decisions after thorough internal reviews, concluding that accepting the proposal would be challenging. The decision highlights worries about committing such a substantial sum of money upfront when the future of the semiconductor industry's artificial intelligence (AI) boom remains uncertain.

Although the proposed prepayment scheme could have facilitated the expansion of power infrastructure for semiconductor facilities under construction in Yongin, south of Seoul, and the southwestern Honam region, the companies chose to reduce management uncertainties for now. As of June, KEPCO's total debt amounted to 210.7 trillion won, with daily interest expenses reaching 11.5 billion won.