Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, said it plans to raise NT$21.6 billion (US$716.2 million) in a bond issuance to finance the construction of a new production site and further expand manufacturing capacity.
TSMC on Monday in a statement said that it would issue NT$21.6 billion of secured corporate bonds in three tranches: NT$5.9 billion of five-year bonds at a rate of 0.52 percent, NT$10.4 billion of seven-year bonds at 0.58 percent and NT$5.3 billion of 10-year bonds at 0.6 percent.
MasterLink Securities Co (元富證券) is the lead underwriter for the sale, TSMC said.
Photo: Reuters
The chipmaker did not say when the bonds would be issued, but there is speculation that it could be by the end of this month.
Proceeds from the sale would be used to finance the firm’s development of advanced 5-nanometer and 3-nanometer processes at its facility in the Southern Taiwan Science Park (南部科學園區), analysts said.
The company mass produces 7nm chips, but expects to start the mass production of 5-nanometer chips in the first half of this year and 3-nanometer chips in 2022.
The planned bond issuance would be TSMC’s second of this year, after it issued NT$24 billion in unsecured bonds last month.
TSMC’s board of directors in February approved a proposal to offer up to NT$60 billion in unsecured bonds in Taiwan, its largest corporate bond issuance in six years, which means that the firm could issue an additional NT$14.4 billion of bonds.
The company is one local firm that took advantage of rate cuts worldwide, sparked by concern over the effects of the COVID-19 pandemic on the global economy, to lower its fundraising costs, analysts said.
The interest rate on the planned bond issuance is 0.06 percentage points lower than on last month’s issuance, analysts said, adding that the 0.52 percent rate on the tranche of five-year bonds is the lowest among private companies that have sought to raise funds in Taiwan over the past few years.
At an investors’ conference in January, TSMC said that it expected to raise its capital expenditure for this year from a record US$15 billion to US$16 billion — 80 percent of which would go toward developing 3-nanometer, 5-nanometer and 7-nanometer technology.
Of the remaining 20 percent, 10 percent would be used to develop better packaging and testing technology, and 10 percent would be used to develop processes to enable the firm to maintain its competitive edge, TSMC said.
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