Key Takeaways
- Samsung Electronics and SK Hynix have rejected a $18.7 billion prepayment proposal from KEPCO.
- The companies cited uncertainty over long-term semiconductor demand as a reason for their rejection.
- KEPCO proposed the prepayment to support power supplies for planned semiconductor mega clusters.
Samsung Electronics and SK Hynix have rejected a proposal by Korea Electric Power Corporation (KEPCO) to make a 25 trillion won ($18.7 billion) upfront payment to support power supplies for planned semiconductor mega clusters, according to a document submitted to a lawmaker.
The two chipmakers told the state-run utility company it would be difficult to accept the proposal following internal reviews, according to the document, which was shared with Reuters by the office of lawmaker Lee Chul-gyu.
Samsung Electronics and SK Hynix were unsure if such large upfront payments were necessary, citing uncertainty over the long-term durability of semiconductor demand, a company official in Seoul told Reuters.
KEPCO had proposed that the chipmakers make the advance payment for electricity expected to be consumed by new chip fabrication plants, in order to allow the utility company to invest in infrastructure to power the plants.
The companies are concerned about the sustainability of the semiconductor industry, which could impact the need for such a significant financial commitment.
KEPCO's proposal was aimed at ensuring stable power supplies for the upcoming semiconductor mega clusters, but the chipmakers are hesitant to commit to such a large sum without a clearer understanding of future demand.
Both Samsung and SK Hynix declined to comment on the matter, maintaining their official stance of uncertainty.
The rejection of the proposal could have significant implications for the development of the semiconductor industry in South Korea, as it may affect the timeline and feasibility of the planned mega clusters.
