By outdoor-nature-child.com In September, Quanta Computer raised nearly $1 billion through convertible bonds, as the semiconductor industry expands operations to meet the soaring demand for artificial intelligence (AI) components. This marked a significant milestone, with Taiwanese companies achieving record-high fundraising levels overseas, the best seen in nearly two decades.
According to data compiled by Bloomberg, Taiwanese semiconductor firms and hardware manufacturers have collectively raised $2.9 billion overseas this year, with projections indicating it could reach the highest levels since 2007.
Analysts suggest that the intense competition for chip procurement and capacity expansion will keep the demand for funding among Taiwan’s tech industry high. Furthermore, since mid-September, the Taiwanese stock market has seen significant rebounds, which is likely to inspire more capital raises.
Pei-Hsin Pu, managing director of Citigroup’s Asia Equity Capital Markets, commented, “In the next two to three years, Taiwanese companies, especially in the tech sector, will require more funding.” She emphasized that the urgent demand for chips, exacerbated by supply constraints, will continue to fuel the fundraising trend.
Bloomberg also reported that Foxconn is considering raising as much as $700 million through convertible bonds to expand its server capacity. Meanwhile, Quanta Computer has already completed a convertible bond offering worth up to $1 billion in September.
Convertible bonds are particularly popular when financing costs are high, as these hybrid securities typically offer lower interest rates than standard bonds. If stock prices rise, investors stand to benefit as well. Most transactions are conducted overseas in U.S. dollars, facilitating procurement of raw materials from foreign sources.
However, Herald van der Linde, Head of Asia Pacific Equity Strategy at HSBC, cautioned that “market pricing reflects too much optimism.” He has downgraded his rating on Taiwanese stocks due to regulatory and demand considerations.
Despite this, there are currently no signs of a slowdown in demand. Pei-Hsin Pu noted that new investors are entering the mix, including sovereign wealth funds and long-term investors who previously showed little interest in Taiwanese equities.
“This is the first time in many years that we’ve seen them actively participate in global Depository Receipts (GDR) and convertible bonds, willing to invest time in research, even seeking information from us before we launch transactions,” she said.