TSMC Prepares to Sell Bonds in Taiwan Amid Major Expansion

Taiwan Semiconductor Manufacturing Co. is set to sell local currency bonds Thursday, as it prepares for a spending blitz amid a global chip shortage.

The world’s largest maker of chips for other companies plans to price about NT$16 billion ($575 million) of notes in three parts in an auction, though the actual issuance size may change. The manufacturer will have to contend with a recent rise in rates globally that has sent many corporate bond yields up from record lows in the past few weeks.

TSMC Prepares to Sell Bonds in Taiwan Amid Major Expansion


The debt offering comes at a promising time for the semiconductor industry as the world scrambles its way through the shortfall for the key components in everything from smartphones to TVS and cars. U.S. President Joe Biden’s administration has pressed Taiwan, home to the largest semiconductor manufacturing sector in the world, to help resolve the shortfall for auto chips that has idled some car plants.

TSMC announced in January that its outlay for capital expenditure this year could total as much as $28 billion, up from $17 billion last year. The staggering sum would help expand its technological lead and fund construction of a planned $12 billion plant in the southwestern U.S. state of Arizona. The company’s board approved a plan this month to raise up to NT$120 billion of unsecured corporate bonds in Taiwan, as well as the provision of a guarantee to a unit for dollar note issuance up to $4.5 billion.

“TSMC needs funds for building its U.S. factory,” and it may decide later in the year to increase its debt issuance plans, according to Baker Tu, a trader at Capital Securities Corp. Concerns about extra future bond supply from the company could dampen demand for Thursday’s offering, he said.

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