Seoul: South Korea's two major chipmakers, Samsung Electronics Co. and SK hynix Inc., have rejected a proposal from state-run Korea Electric Power Corp. (KEPCO) to prepay five years' worth of electricity bills, industry sources said Monday.

According to Yonhap News Agency, debt-ridden KEPCO recently proposed that Samsung Electronics pay 20 trillion won (US$14.8 billion) and SK hynix pay 5 trillion won in advance, amounts equivalent to roughly five years of electricity bills based on the companies' payments last year. Both companies reportedly informed KEPCO of their decisions after internal reviews, concluding that accepting the proposal would be difficult.

The decision reflects concerns about committing a substantial amount of money upfront amid uncertainties in the semiconductor industry's ongoing artificial intelligence (AI) boom. The proposed prepayment scheme aimed to aid in expanding power infrastructure for semiconductor clusters under construction in Yongin, south of Seoul, and the southwestern Honam region. However, Samsung Electronics and SK hynix appear to have prioritized minimizing management uncertainties.

As of the end of June, KEPCO's total debt stood at 210.7 trillion won, with daily interest expenses reaching 11.5 billion won.