Samsung Electronics and SK Hynix Decline Kepco's Proposal for W25 Trillion Advance Electricity Payment

Samsung Electronics and SK Hynix have reportedly turned down Korea Electric Power Corporation's (Kepco) proposal to prepay five years of electricity bills totaling 25 trillion won.

According to industry sources on the 14th, Samsung Electronics and SK Hynix concluded after internal reviews that accepting the proposal would be difficult and conveyed this decision to Kepco.

This is interpreted as a burden for the chipmakers to pre-spend costs assuming that the semiconductor industry's record boom, which began in the second half of last year, will continue for five years.

This is because paying massive electricity bills all at once could act as a burden on mid-to-long-term management strategies.

While some analyses suggested that prepaying electricity bills could help build power infrastructure for the Yongin and Honam semiconductor clusters, the companies reportedly chose to minimize management uncertainty for now.

Recently, Kepco proposed that Samsung Electronics and SK Hynix prepay electricity bills amounting to 20 trillion won and 5 trillion won, respectively.

This corresponds to five years' worth of electricity bills based on what the two companies paid last year.

Kepco explained that the prepaid electricity fees would be prioritized for investment in national grid power supply.

It was also reported that Kepco proposed a method of deducting electricity bills on a semi-annual basis by applying an interest rate higher than the yield on two-year Treasury bonds for the prepaid fees.

For Kepco, there were expectations that this would help ease the burden of issuing new corporate bonds while securing financial resources for grid investment.

As of the end of June, Kepco's total liabilities stood at 210.7 trillion won, with daily interest amounting to 11.5 billion won.

In addition, the government special exemption that expanded the limit on bond issuance from twice the sum of capital and reserves up to five times is also set to end by the end of next year.
 
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.