TSMC unit to issue US$10 billion of stock to counter forex swings

[TAIPEI] Taiwan Semiconductor Manufacturing Co’s overseas unit is set to issue US$10 billion worth of new stock to shore up its forex hedging operations, making its biggest such move to counter a volatile local currency.

TSMC Global is poised to issue the shares to help it hedge against forex swings, the company said in a statement. It’s the third such deal since 2024, and by far the largest. They occurred during periods when the Taiwan dollar tended to appreciate. The moves grant TSMC Global – the vehicle responsible for managing overseas investments and hedging – more capital flexibility in managing exchange rate risks.

Recent gains by the Taiwan dollar have caused worries in Taipei about the economy’s heavy reliance on exports. In May, the currency notched its biggest single-day gain since the 1980s, spurring calls from the central bank to curb speculation.

“Generally speaking, the heightened forex volatility would mean that banks may be adjusting their margin requirements,” said Philip McNicholas, Asia sovereign strategist at Robeco based in Singapore. “Issuing new shares, and bringing in an immediate cash injection, may help companies manage the margin requirements on both existing and new hedges.”

TSMC, the main chipmaker to Apple and Nvidia, is by far the island’s biggest company and exporter because the majority of its production is domestic. A stronger Taiwan dollar hurts exporters because the US dollars they earn from sales abroad would translate into less of the local currency, or they would need to raise their prices overseas and risk denting demand.

In June, chief executive officer CC Wei told shareholders the company’s operating margin has fallen several percentage points because of a stronger local currency. BLOOMBERG