Samsung, SK Hynix May Apply for Low-Interest Loans from Korea Development Bank
TapTechNews July 1st news, according to the report of the Korea Economic Daily, Samsung Electronics and SK Hynix are respectively considering applying to the Korea Development Bank for 5 trillion and 3 trillion Korean won (TapTechNews note: currently about 263.8 / 158.28 billion Chinese yuan respectively) of low-interest loans for business expansion.
The Korea Development Bank is wholly-owned by the Korean government and is the only policy-based financial institution in South Korea, mainly providing long-term funds for the development of the Korean national economy.
The Korean Ministry of Planning and Finance has previously announced the 'Comprehensive Support Plan for the Semiconductor Ecosystem'.
As part of this plan, the Korea Development Bank will issue 17 trillion Korean won of low-interest loans to semiconductor enterprises, among which large enterprises can get a 0.8~1% interest rate discount, while the interest rate preference for small and medium-sized enterprises is a higher 1.2~1.5%.
SK Hynix
For SK Hynix, applying for a 3 trillion Korean won loan is mainly to make up for the gap between the large-scale investment plan and the existing cash reserve:
SK Hynix will invest more than 120 trillion Korean won cumulatively in the Yongin Semiconductor Cluster in Gyeonggi-do, and the company also previously announced a plan to invest 4 billion US dollars to build an AI memory chip packaging plant in Indiana, USA;
However, as of the end of the first quarter, SK Hynix only has 8.2 trillion Korean won in cash reserves.
SK Hynix has already borrowed 25 trillion Korean won from financial companies, and this low-interest loan can relieve the pressure on its finances.
Samsung Electronics
Samsung Electronics has not yet decided to borrow this low-interest loan, but has consulted the Korea Development Bank about the available amount and interest rate.
The main reason why Samsung Electronics considers applying for this loan is not due to a shortage of funds - as of the end of 2023, the company holds 91 trillion Korean won in cash and cash equivalents, but rather for financial cost considerations:
Samsung Electronics borrowed about 22 trillion Korean won from its subsidiary Samsung Display at an annual interest rate of 4.6% in early 2023, while the low-interest loan rate provided by the Korea Development Bank is only 3.5%.
If Samsung Electronics finally decides to apply for the loan, this will be the first long-term loan borrowed by this tech giant for large-scale construction investment in 20 years.
Korean media quoted sources as saying that Samsung Electronics has also recently consulted Korean and foreign securities companies about corporate bond related matters. The last time Samsung Electronics issued corporate bonds in the global market was in 2012, and the last bond issuance in South Korea can be traced back to 2001.