[Exclusive] National Growth Fund Weighs KRW 700 Billion Investment in LNG Plant to Supply Power to SK hynix

Support to be finalized as early as this year... around KRW 700 billion under consideration
Race to stay ahead in semiconductor competition... expanding the cluster's supply infrastructure

The National Growth Fund is considering investing around 700 billion won in a liquefied natural gas (LNG) combined heat and power plant project to supply electricity and heat to SK hynix's Yongin Semiconductor Cluster. The investment amount and structure are expected to be finalized as early as this year. As global competition for semiconductor supremacy intensifies, the plan is to support the expansion of the energy infrastructure needed to increase production capacity.

According to financial industry sources on October 22, the Financial Services Commission and the Korea Development Bank are considering investing in the Yongin Semiconductor Cluster district energy project, which has a total project cost of 3.3027 trillion won. The government plans to convene an investment review committee and finalize the investment amount and structure as early as this year. An investment of around 700 billion won is under consideration, primarily in the form of loans, while equity investment is also being reviewed.

The project will build energy infrastructure to meet the electricity and heat demand of SK hynix's factories and other facilities in the general industrial complex of the Yongin Semiconductor Cluster in Wonsam-myeon, Cheoin-gu, Yongin, Gyeonggi Province. Korea Midland Power and SK Innovation E&S will establish a special purpose company (SPC) to carry out the project. The plant will have a generation capacity of 1,050 MW, comprising two 525 MW units, and a steam production capacity of 1,397 tons per hour. It will operate as a combined heat and power plant, using LNG to produce electricity and heat. The heat will be supplied to semiconductor plants as industrial steam and used to maintain stable internal temperatures and humidity.

The timing of the investment will depend in part on the resolution of detailed terms among the parties involved in the project. Final negotiations are reportedly underway over the construction schedule proposed by Hyundai Engineering, which was selected as the preferred bidder for the engineering, procurement and construction (EPC) contract, as well as the energy supply terms for SK hynix. Key issues include how to address fluctuations in fuel prices, liability for damages in the event of construction delays, and the energy purchase price to be paid by SK hynix. The project's profitability could vary depending on how much of any increase in LNG prices can be reflected in the steam supply price. If negotiations proceed smoothly, construction of the power generation facilities is expected to run from December 2026 through December 2030, with the steam facilities scheduled for completion by March 2028.

The National Growth Fund has continued to support semiconductor design and production. In February, it approved low-interest loans totaling 2.5 trillion won to build Samsung Electronics' P5 AI semiconductor production facility at its Pyeongtaek campus, including 2 trillion won from the Advanced Industry Fund and 500 billion won from five major commercial banks. In March, it approved a direct investment of 250 billion won from the Advanced Industry Fund in Rebellions, and in May, it approved a direct investment of 370 billion won from the fund in FuriosaAI. If the latest investment takes shape, the fund's support will expand beyond individual companies' facility and technology investments to include the energy supply infrastructure underpinning semiconductor production.

Securing electricity is considered a key challenge that will determine whether the semiconductor cluster can operate. Semiconductor plants require a continuous, reliable supply of large amounts of electricity to run production equipment and cleanrooms, as well as heat to maintain stable temperature and humidity. Even after production facilities are completed, delays in energy supply could disrupt operations. For this reason, factory construction must proceed alongside the expansion of electricity and heat supply infrastructure. District energy facilities that generate electricity and heat near areas of demand help strengthen this supply infrastructure.

This content was produced with the assistance of AI translation services.