Taiwan Semiconductor Manufacturing Co (TSMC) , the world’s largest contract chipmaker, reported a 54% jump in quarterly profit , surpassing forecasts, thanks to soaring demand for AI-related chips . This robust performance underscores TSMC’s dominance in producing advanced chips for AI applications, with key customers like Apple and Nvidia . TSMC's net profit for 3Q2024 reached T$325.3 billion (US$10.11 billion) , exceeding the T$300.2 billion forecasted by analysts. The company's revenue rose 36% year-on-year to US$23.5 billion , driven by strong demand for smartphone and AI chips utilizing its cutting-edge 3nm and 5nm technologies . The AI boom has been a major growth driver, with AI processors expected to account for a mid-teens percentage of TSMC's overall revenue for 2024. TSMC's capital spending for the current quarter is set to more than double to US$11.5 billion , and it expects capital expenditure to increase further in 2025 as demand remains robust. Chai
Taiwanese companies are raising funds at record levels as the global race for artificial intelligence (AI) components drives chipmakers and hardware manufacturers to expand. Total share sales abroad by Taiwanese firms have reached $2.9 billion so far in 2024, marking the highest fundraising activity since 2007, according to Bloomberg data.
Companies such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Hon Hai Precision Industry Co. are leading the charge, bolstered by surging AI demand. TSMC and its peers are reporting stronger-than-expected revenue, while the local stock market’s sharp rebound since mid-September has further encouraged fundraising through share offerings and convertible bonds.
Hon Hai, a major supplier for iPhone and MacBook makers, is considering raising $700 million through convertible bonds to boost its server capacity. Similarly, Quanta Computer Inc. raised $1 billion in August via a convertible bond offering to fund its expansion.
Convertible bonds are becoming increasingly popular in this high borrowing cost environment due to their lower interest rates and potential upside for investors should the underlying stock price increase. According to Ivan Nikolov of Fisch Asset Management AG, this makes convertibles an attractive option for companies with a positive growth outlook but who may face volatility.
While Taiwanese tech firms are expected to maintain elevated borrowing levels in the coming years to secure chip supplies and meet growing AI-related demand, some analysts urge caution. Herald van der Linde of HSBC Holdings Plc warned that Taiwanese stocks may be overvalued, with the Taiex benchmark rallying almost 30% this year.
Despite these concerns, investor interest remains strong, with sovereign wealth funds and long-only investors showing renewed enthusiasm for Taiwanese deals. Jennifer Pu of Citigroup Inc. noted that this is the first time in years that these investors are actively engaging in global depositary receipts and convertible bond transactions.
Taiwan’s fundraising boom shows no signs of slowing as companies continue to capitalize on the global AI expansion and secure capital for future growth.
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