Samsung 20 trillion won, SK hynix 5 trillion won — equivalent to five years of electricity bills

Semiconductor industry volatility cited as key concern over large upfront payment

Samsung Electronics' headquarters in Seocho, Seoul, and SK hynix's main campus in Icheon, Gyeonggi Province. [Yonhap]
Samsung Electronics' headquarters in Seocho, Seoul, and SK hynix's main campus in Icheon, Gyeonggi Province. [Yonhap]

Samsung Electronics and SK hynix have turned down a proposal from Korea Electric Power Corporation to prepay their electricity bills, industry sources said Monday.

The two chipmakers internally reviewed Korea Electric Power Corporation's proposal to prepay 25 trillion won ($18.6 billion) — equivalent to five years of electricity charges — and informed the state utility of their decision to decline, according to industry sources.

Korea Electric Power Corporation had proposed that Samsung Electronics prepay around 20 trillion won and SK hynix around 5 trillion won, amounts corresponding to roughly five years of electricity bills each company paid last year.

The utility had also offered incentives, including an interest rate higher than the yield on two-year Korean Treasury bonds applied to the prepaid amount, with the principal and interest to be deducted from electricity bills paid every six months thereafter.

Korea Electric Power Corporation had planned to channel the prepaid funds into investment in the national power grid. Transmission and substation infrastructure to meet the massive electricity demand from semiconductor clusters being developed in Yongin, Gyeonggi Province, and the South Jeolla Province-Gwangju integrated special city were among the projects cited.

The utility had also hoped the arrangement would help ease its debt burden, which stood at 210.7 trillion won as of the first half of this year.

The semiconductor industry, however, appears to have balked at committing such a large sum upfront, given uncertainty over whether the current memory chip boom will last through the next five years.


joze@heraldcorp.com