The AI race begins globally, and Taiwanese companies launch the largest overseas fundraising boom in 17 years
TechNews Financial News
October 17, 2024
Author China Central Radio
October 17, 2024
Author China Central Radio
Chip manufacturers continue to launch expansion plans to meet the growing demand for artificial intelligence components. Bloomberg reported that compiled data show that the scale of overseas financing plans of Taiwanese companies this year reached the highest level in the past 20 years, with the amount raised reaching US$2.9 billion (approximately New Zealand dollars). NT$93.3 billion), a new high since 2007.
Analysts believe that in view of the fierce competition for chips and expansion of production capacity, the borrowing demand of Taiwanese technology companies will remain at a high level, and the demand for AI is growing. TSMC and its peers have reported higher-than-expected revenue. Taiwanese stocks have rebounded sharply since mid-September, which is beneficial to encourage More capital increase plans.
Jennifer Pu, managing director of Citigroup Taiwan's Asia Equity Capital Markets, said: "In two to three years, Taiwanese companies, especially technology companies, will have more capital needs, especially chip supply is still tight, which will continue to drive a wave of financing."
Convertible debt financing has advantages when interest rates rise
The next most significant large-scale financing plan is iPhone manufacturer Hon Hai Precision's plan to issue convertible corporate bonds, which is expected to raise up to US$700 million in order to increase server production capacity. Previously, Apple Macbook maker Quanta Computer sold convertible bonds in September to raise US$1 billion.
When financing costs are high, companies often choose to issue convertible corporate bonds to raise funds, because hybrid securities bonds tend to pay lower interest rates than general debt. If the related stocks rise, they also provide investors with profit opportunities. These transactions are mostly issued overseas. To raise US dollar funds to help purchase raw materials.
However, given that Taiwan's weighted stock price index has risen by 30% this year, some market participants have begun to issue warnings.
The stock price has risen, but the market has not reduced investment interest
Herald van der Linde, head of Asia-Pacific equity strategy at HSBC Holdings PLC, warned: "The market is pricing in too much optimism." He has reduced his exposure to Taiwan stocks due to regulatory and demand considerations.
However, Pu Xinyi said that currently, market demand has shown no signs of slowing down, and new investors are constantly joining, including sovereign wealth funds and long-term investors who were previously indifferent to the Taiwan market.
Pu Xinyi said: "This is the first time in many years that I have seen them so active in Global Depositary Receipts (GDRs) and convertible bonds, and they are willing to spend time researching, and will also ask to share information before initiating transactions."
Related links: https://finance.technews.tw/2024/10/17/ai-race-spurs-largest-taiwanese-fundraising-boom-since-2007/
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