14 September 2026
Executive Summary
South Korea’s plans for enormous new semiconductor manufacturing clusters have encountered a significant power-infrastructure financing dispute, highlighting an increasingly important constraint on global chip production.
Samsung Electronics and SK Hynix have rejected a proposal from Korea Electric Power Corporation to prepay approximately 25 trillion won — around US$18.7 billion — of future electricity charges.
KEPCO proposed using the money to help finance transmission infrastructure required to supply planned semiconductor mega-clusters.
The proposal included approximately:
- 20 trillion won from Samsung.
- 5 trillion won from SK Hynix.
KEPCO has said discussions concerning the exact scale, duration, financing structure and participation have not been finalised.
The dispute does not mean semiconductor production has stopped.
Nor does it mean the planned clusters will necessarily be delayed.
But it exposes an increasingly important infrastructure problem.
Advanced semiconductor manufacturing requires enormous amounts of reliable electricity.
Building the fabrication plants is therefore only one part of semiconductor supply security. The grid capable of powering them must also be financed and built.
UK Impact
UK companies depend heavily upon semiconductors across:
- Automotive manufacturing.
- Aerospace.
- Defence.
- Telecommunications.
- Electronics.
- Medical devices.
- Data centres.
- Industrial machinery.
- AI infrastructure.
Samsung and SK Hynix are particularly important suppliers of memory products.
A future delay in capacity expansion could therefore affect:
- Memory-chip availability.
- Prices.
- Lead times.
- AI-server production.
- Electronics manufacturing.
The lesson for UK businesses is broader.
Supply-chain due diligence should examine not only factory capacity but also whether critical suppliers have sufficient:
- Electricity.
- Water.
- Grid connections.
- Transport infrastructure.
Global Impact
Semiconductor policy increasingly concentrates on factories and subsidies.
But advanced chip manufacturing also requires exceptionally large infrastructure investment.
A major fabrication cluster may depend upon:
- New substations.
- Long-distance transmission.
- Backup generation.
- Water systems.
- Waste-treatment facilities.
- Specialist logistics.
The Korean dispute demonstrates that those supporting assets may create financing challenges separate from the fabs themselves.
Similar constraints are emerging around data centres and AI infrastructure worldwide.
That creates competition for the same resources:
- Electricity.
- Grid capacity.
- Skilled engineers.
- Construction workers.
- Transformers.
Our View
Businesses exposed to semiconductor supply should expand supplier-risk assessment beyond manufacturing capacity.
Companies should ask:
- Which chip suppliers are critical to us?
- Where are their fabs located?
- How reliable is local electricity supply?
- Is new capacity dependent upon unfinished grid infrastructure?
- How concentrated is memory supply?
- Are second-source suppliers approved?
- Can products use alternative chip specifications?
- How long would redesign take?
- Is additional inventory justified?
- Are long-term supply agreements available?
- Could electricity constraints delay capacity expansion?
- Are semiconductor suppliers competing with data centres for power?
- Could infrastructure costs feed into chip pricing?
- Does our continuity plan assume future capacity that has not yet been built?
The important distinction is between:
announced manufacturing capacity
and
capacity that can actually be powered reliably.
Risk Indicator: HIGH – SEMICONDUCTORS, POWER & STRATEGIC SUPPLY CHAINS
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The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
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