[News] Korean Power Utility Reportedly Asks Samsung, SK hynix to Prepay ~5 Years of Power Bills Worth KRW 25T

Surging power demand from AI data centers is pushing South Korea to accelerate power grid expansion — and now even the country’s memory giants are being pulled into the effort. According to Hankyung, Korea Electric Power Corp. (KEPCO) has reportedly proposed that Samsung Electronics and SK hynix prepay trillions of won in electricity bills. Under the plan, KEPCO would pay interest on the prepaid funds and use them to build large-scale power infrastructure for semiconductor industrial complexes.

Sources say KEPCO has asked Samsung Electronics and SK hynix to prepay KRW 20 trillion and KRW 5 trillion, respectively, equivalent to roughly five years of electricity bills based on what the two companies paid last year.

The parties are reportedly discussing an interest rate in the mid-3% range. KEPCO is said to favor the two-year government bond yield plus 15 basis points, while Samsung Electronics and SK hynix are seeking a rate closer to the roughly 3.7% yield on two-year KEPCO bonds. Interest could be paid through electricity bill deductions every six months rather than in cash, the report adds.

KEPCO Reportedly Turns to Prepayments to Fund Grid Expansion

KEPCO reportedly plans to channel the prepaid funds into power grid construction for semiconductor clusters in Yongin and the Honam region, where rising power needs are driving substantial infrastructure requirements. Yonhap News notes that the Honam semiconductor cluster alone is expected to require around 6.3 GW, with an initial 3 GW targeted for supply by 2029 and capacity eventually set to exceed 6 GW.

KEPCO argues that the proposal could also benefit Samsung Electronics and SK hynix, as securing funding for grid expansion could help ensure that the power infrastructure needed for their new fabs is completed in time for their planned production schedules, Yonhap News notes.

The proposal also comes as KEPCO faces mounting financial pressure. According to Hankyung, its debt stood at KRW 210.716 trillion as of the first half of this year, while daily interest expenses reached KRW 11.5 billion. The company is also finding it increasingly difficult to rely on new bond issuance to roll over its obligations. A government exemption allowing KEPCO to issue bonds worth up to five times its combined capital and reserves is set to expire at the end of next year.

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(Photo credit: SK hynix)