Samsung, SK Hynix Reject Kepco’s Power Grid Prepayment Plan

Samsung Electronics Co. and SK Hynix Inc. have rejected a proposal from Korea Electric Power Corp. that would have seen the two pay in advance for electricity in order to finance the construction of grids to power new technology clusters.

Cash-strapped utilities across Asia are struggling to keep up with the growing demand from the semiconductor and artificial intelligence industries. Kepco’s plan — estimated by local media at a combined 25 trillion won ($18 billion), equivalent to five years of bills — was an effort to work around that mismatch.

“The companies have ultimately rejected Kepco’s proposal,” a Kepco spokesman said in a text message.

The two chipmakers were concerned about committing such large sums upfront given uncertainty over whether the current semiconductor boom would continue for the next five years, according to local media reports.

Samsung declined to comment on Monday. SK Hynix did not immediately respond to Bloomberg queries.

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Under the proposal, the chipmakers would have paid the 25 trillion won over about a year. Kepco would have paid interest on the remaining prepaid balances. The alternative source would have reduced Kepco’s reliance on bond issuance for funding.