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Seoul, September 15, 2026 – South Korea’s two largest semiconductor makers, Samsung Electronics and SK Hynix, have rejected a sweeping proposal from Korea Electric Power Corp (KEPCO) to provide a massive upfront payment for electricity infrastructure, highlighting the tension between corporate caution and state driven industrial ambitions.
According to a document disclosed to lawmaker Lee Chul gyu, KEPCO had sought 25 trillion won ($23.6 billion) in advance payments from the chipmakers.
The funds were intended to finance power grid expansion and secure electricity supply for new semiconductor mega-clusters, part of South Korea’s broader plan to cement its role as a global chip hub.
Both Samsung and SK Hynix declined after internal reviews, citing uncertainty in long term semiconductor demand.
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Executives argued that committing such vast sums upfront would expose them to risks in a notoriously cyclical industry, where memory chip prices and demand can swing sharply.
The rejection underscores the delicate balance between government led industrial policy and corporate risk management.
While South Korea has pledged more than 1,000 trillion won ($745 billion) in public and private investment to expand semiconductor capacity, the refusal suggests that chipmakers are unwilling to shoulder disproportionate financial burdens for infrastructure projects.
For KEPCO, the setback is significant. The utility, already grappling with mounting debt, had hoped to secure financing through prepayments to accelerate grid expansion.
Without such commitments, KEPCO may struggle to deliver the energy capacity required for advanced fabs, potentially slowing the country’s semiconductor ambitions.
Industry analysts note that the decision reflects broader caution in the sector.
Memory chips, SK Hynix’s core business, remain highly volatile, and Samsung has also faced margin pressures amid global demand fluctuations.
With competitors in the U.S., Japan, and Taiwan investing heavily in semiconductor ecosystems, South Korea’s ability to maintain its edge could be challenged if infrastructure lags.
The rejection also raises questions about investor confidence and corporate autonomy.
By resisting government backed financing schemes, Samsung and SK Hynix signal a preference for financial prudence over political pressure.
Yet the move may force policymakers to explore alternative mechanisms such as subsidies or direct state investment to keep the country’s semiconductor expansion on track.
Ultimately, the standoff illustrates the risks of aligning national industrial policy with private sector realities.
South Korea’s semiconductor ambitions remain vast, but without consensus between government and industry, the path forward may prove more complicated than anticipated.
