Samsung Electronics and SK Hynix’s rejection of Korea Electric Power Corporation’s (KEPCO) $18.6 billion (25 trillion won) electricity prepayment proposal exposes a deeper weakness in South Korea’s semiconductor strategy.

The country has committed to power-hungry chip and artificial intelligence (AI) clusters without fully resolving who should bear the financial risk of building the grid ahead of uncertain demand.

The two chipmakers rejected on Monday a proposal to advance roughly five years of electricity payments — around $14.9 billion (20 trillion won) from Samsung and $3.7 billion (5 trillion won) from SK Hynix — that KEPCO planned to use to help