Samsung, SK hynix to pay less for power grid construction at Yongin cluster

A bird’s-eye view of the Yongin Semiconductor Cluster. (SK hynix)

Samsung Electronics Co. and SK hynix Inc. are expected to pay less for power grid construction at the government-led Yongin Semiconductor Cluster, as the South Korean government announced plans to expand publicly funded transmission networks to ease costs for the companies.

According to the Ministry of Trade, Industry and Energy on Wednesday, Korea Electric Power Corp. (KEPCO), Samsung Electronics, and SK hynix are set to sign a memorandum of understanding (MOU) next week outlining the revised power transmission structure at the Yongin cluster.

“There have been many requests from companies for the government to take responsibility for infrastructure, including power grids,” said Vice Minister Park Sung-taek.

The MOU aims to balance the beneficiary-pays principle while minimizing corporate cost burdens.

“The initial transmission network cost estimate was too high,” said a senior official from the ministry. “Now costs have been adjusted through various measures, reaching a solution acceptable to both government and industry.”

The Yongin Semiconductor Cluster, set on a 7.1 million-square-meter site in Yongin in Gyeonggi Province, is designed to support Korea’s semiconductor industry.

Samsung Electronics plans to invest 380 trillion won ($270 billion) by 2043 to build six foundry facilities and three advanced research centers.

SK hynix aims to invest 122 trillion won by 2027 to construct four memory fabrication plants, with the first line set to break ground next year.

Power transmission costs, however, had been a major hurdle, as the cluster’s power needs—equivalent to the output of ten nuclear reactors (10 GW)—would have to be supplied by coastal power plants. This is about one-fourth of the total demand in the Seoul metropolitan area.

In response, the government has agreed to expand the public transmission network, funded by KEPCO, and scale back the private network funded by the companies.

Industry insiders estimate that this arrangement could reduce the 3.7 trillion won transmission network construction cost by more than 1 trillion won for the companies.

Previously, the government and KEPCO had a stance that the semiconductor companies should bear the transmission network costs. Samsung Electronics and SK hynix, however, argued for government support, pointing to significant subsidies offered by other nations to attract high-tech industries.