Samsung Electronics and SK hynix rejected an upfront payment offer of 25 trillion won from South Korea’s power company KEPCO. According to Reuters, based on a document obtained on September 14, the offer aimed to support the electricity needs of new semiconductor production clusters. The amount, corresponding to approximately 18.7 billion dollars, was based on producers providing financing for infrastructure investment by paying in advance for the electricity they will use in the future. Neither company commented on the news.
The document cited by Reuters states that the companies did not accept the proposal after internal evaluations. Thus, a new situation emerged in terms of the financing model that was revealed to the public at the beginning of the month. This is not about cutting off existing electrical service or collecting an unpaid bill. KEPCO was looking for a deal that would finance future consumption today; companies did not agree with this proposal.
In Seoul Economic Daily’s detailed news dated September 3, it was stated that the proposal was based on five-year consumption spanning the period 2027-2031. Within the scope of the plan, approximately 20 trillion won was requested from Samsung and approximately 5 trillion won from SK hynix. The calculation was based on the companies’ electricity costs in 2025. Therefore, the amount on the agenda was not presented as a new announced annual tariff.
The prepaid balance was expected to be deducted from electricity bills in the following months. This method was intended to provide KEPCO with cash for investment sooner while changing the payment timing of large consumers. Interest to be paid to the customer was also part of the negotiations. The attractiveness of the model for companies would depend not only on electricity consumption but also on the cost of capital to be allocated years in advance.
Electrical infrastructure of chip production seeks financing
The news published by SBS about the offer states that KEPCO already has an application that provides advance payments and interest. The institution was considering the option of private regulation to use it on a much larger scale. It is also stated in the news that there is talk of covering the interest with a discount from the invoice instead of cash. KEPCO announced that details such as participation, amount and interest were not finalized at that stage.
On the infrastructure side, semiconductor production investments and new electricity transmission lines in Yongin stand out. Seoul Economic Daily notes that KEPCO’s total liabilities reached 210.7 trillion won by the end of June 2026. This chart explains why the company sought financing outside of its usual collection pattern. As well as establishing chip factories, reliably transporting the electricity that these facilities will need requires investment.
The advance payment proposal aimed to combine the producers’ need for access to energy and the electricity company’s search for investment resources in the same agreement. The rejection decision shows that this financing option is not accepted in its proposed form. However, the information disclosed does not support the conclusion that all network investments have stopped. For a new payment model or alternative financing decision, the parties must also make a statement.