TSMC to issue $473.3 million in bonds to expand production capacity

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Taiwanese Semiconductor Manufacturing Company (TSMC) plans to issue NT$13.9 billion ($473.3 million) in unsecured bonds to expand its output capacity, reports DigiTimes. The corporation intends to use its new funding to boost the capability of its Fab 18 complex.

Despite facing headwinds from international trade tensions, TSMC is spending billions to keep pace with demand for its services.

TSMC’s Recent Fundraising Efforts

TSMC made a filing with the Taiwan Stock Exchange indicating its forthcoming bond issuance will be divided into three tranches. The firm will offer NT$1.9 billion ($64.7 million), NT$6.3 billion ($214.5 million), and NT$5.7 billion ($194.1 million) payable over ten, seven, and five years, respectively.

The company will use its new cash infusion to expand its 5nm node fabrication capacity in its Southern Taiwan Science Park facility.

The world’s largest semiconductor foundry’s upcoming bond offering could be its second this year. In May, the firm issued NT$60 billion ($2.043 billion) in bonds to enhance its production capacity and fund advanced research.

TSMC has significantly increased its debt load despite recently losing one of its biggest clients. Because of new export controls issued by the U.S. Commerce Department, the manufacturer reportedly ended its business relationship with Huawei. However, a Taiwanese government official stated the brand already received new orders that filled the gap in its production schedule.

Under these circumstances, the firm should have no problem staying current with its bond interest payments.

Why TSMC’s Services are so Popular

Demand for TSMC’s chipmaking services is reaching near-decade highs due to its robust and diverse production contracts.

Corporations including but not limited to Apple, ARM, and Nvidia depend on the brand to produce their most intricate and powerful components. Apple recently decided to eschew Intel chips for CPUs designed by ARM and made by TSMC for its Mac line of computers. The Taiwanese chipmaker will also supply mobile chipsets for Apple’s first 5G-enabled iPhones, which are set for release this fall.

Nvidia contracted the company to fabricate cutting-edge GPUs for the PlayStation 5 and Xbox Series X, also due out in Q4. In addition, the manufacturer announced a partnership with NXP Semiconductors to produce its 5nm automotive processors.

To capitalize on all that interest, TSMC is rapidly building out its existing production capacity and establishing new facilities, like its $12 billion Arizona plant. Understandably, the company is pursuing different fundraising avenues to support its capital expenditures.

While massive near-term spending and debt accumulation can be worrying, it reflects assiduous leadership in this instance.

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