Samsung Electronics (005930.KS) has secured an additional 800 billion won ($560 million) through Korea Development Bank's low-interest loan program. The company plans to leverage policy financing to accelerate production of high-value memory products including HBM4, the sixth-generation high bandwidth memory.
According to financial industry sources on January 6, KDB recently disbursed the 800 billion won loan that Samsung Electronics applied for under the special semiconductor facility investment support program. A senior business community official said, "Samsung Electronics applied for additional loans from KDB, and the funding process has been completed."
The special semiconductor facility investment support program is a low-interest policy loan product worth 17 trillion won designed to nurture the semiconductor ecosystem. Samsung Electronics raised 2 trillion won through this program last year, and with the additional loan, the company has now borrowed a total of 2.8 trillion won from KDB. KDB is the only financial institution from which Samsung Electronics has borrowed for facility investment purposes.
Large corporations using the special program receive preferential interest rates of 0.8 to 1 percentage point lower than KDB's standard corporate loans, which carry rates of 4.01% annually for top-rated borrowers. This suggests Samsung Electronics likely secured the loan at around 3% annually, approximately 1 percentage point below the 4% rates offered by major commercial banks.
Samsung Electronics reportedly took out the additional loan to cover massive facility investment costs needed to expand production of high-value memory products including HBM. The company recently began construction on Plant 5 at its Pyeongtaek campus, the world's largest semiconductor production hub, with an estimated minimum cost of 60 trillion won. Investment requirements are expected to grow further as Samsung has also resumed construction on the Phase 2 line at Pyeongtaek Plant 4, converting it to an advanced memory production line.
Market observers widely view Samsung's decision to utilize low-interest policy loans as rational given the ongoing need for large-scale capital investment. Diversifying funding sources also offers the advantage of stable investment capital procurement. A commercial bank official said, "If a company can secure funding at ultra-low rates comparable to government bonds, there's no reason not to take the loan." The official added, "I understand there's internal opinion at Samsung that there's no need to insist on zero-debt management if borrowing enables aggressive investment expansion and increased profits."
Samsung's borrowing is expected to increase further as the government has decided to provide an additional 50 trillion won in low-interest loans through the National Growth Fund starting this year. Samsung Electronics has already applied for 2 trillion to 3 trillion won from the National Growth Fund for construction costs of the Pyeongtaek Plant 5. If approved, Samsung's total policy financing could reach approximately 6 trillion won.
KDB's expansion of low-interest loan products is also positive for Samsung. The bank is reviewing plans to establish a new 10 trillion won low-interest loan program to support the National Growth Fund project. This product would provide additional loan support to projects selected for National Growth Fund assistance. The loan rate would be at the level of KDB bonds, with one-year KDB bond rates currently around 2.73%.
A business community official said, "With AI memory demand surging, smooth capital supply is essential for companies not to miss the optimal investment timing. As the semiconductor industry takes on the nature of competition between nations, policy financial institutions need to take preemptive action."
A financial industry official said, "Astronomical capital investment is inevitable for AI and semiconductors. The banking sector is providing comprehensive support for domestic industries through lending."