Key facts
- Samsung Electronics and SK hynix rejected KEPCO's proposal to prepay five years of electricity bills.
- KEPCO requested 20 trillion won from Samsung Electronics and 5 trillion won from SK hynix.
- The chipmakers cited uncertainty about the continuation of the AI boom in the semiconductor industry.
- The prepayment scheme was intended to help expand power infrastructure for semiconductor clusters.
- KEPCO's total debt reached 210.7 trillion won by the end of June.
SEOUL, Sept. 14 (Yonhap) -- South Korea's two major chipmakers, Samsung Electronics Co. and SK hynix Inc., have rejected a proposal from state-run Korea Electric Power Corp. (KEPCO) to prepay five years' worth of electricity bills, industry sources said Monday.
Debt-ridden KEPCO recently proposed that Samsung Electronics pay 20 trillion won (US$14.8 billion) and SK hynix pay 5 trillion won in advance, amounts equivalent to roughly five years of electricity bills based on the companies' payments last year, they said.
Samsung Electronics and SK hynix reportedly notified KEPCO of their decisions after conducting internal reviews and concluding that accepting the proposal would be difficult.
The decision is seen as reflecting concerns about committing such a large amount of money upfront when it is uncertain whether the semiconductor industry's current artificial intelligence (AI) boom will continue.
While the proposed prepayment scheme could have helped expand power infrastructure for semiconductor clusters under construction in Yongin, just south of Seoul, and the country's southwestern Honam region, the companies appear to have opted to minimize management uncertainties for now.
As of the end of June, KEPCO's total debt stood at 210.7 trillion won, with daily interest expenses reaching 11.5 billion won.