Intel's Taiwan Bond Issue Akin to Challenging TSMC on its Home Turf

Taiwan's industry executives point out that Intel Corp.'s issue of its corporate bonds in Taiwan is tantamount to raising funds in Taiwan to challenge Taiwan Semiconductor Manufacturing Co. (TSMC) on its home turf as the American firm competes against the world's No.1 pure silicon foundry for the global market.    

Intel, reportedly the world's No.1 chipmaker in non-foundry industry, has recently issued 30-year corporate bonds in Taiwan to raise US$1 billion, which it will set aside to fund the US$16.7 billion acquisition of IC design house Altera Corp., one of TSMC's major customers and whose acquisition by Intel could remove Altera from TSMC's customer list.

Underwriters of the Intel bonds include Yuanta Securities Corp., MasterLink Securities Corp., and Cathay United Bank.

According to Yuanta Securities executives, the company has sold all its quota of US$416 million of Intel bonds mainly due to the relatively attractive 4.9 percent yield rate and Intel's world-class reputation. They say most of the subscribers are life insurers, which are more willing to buy products with the 30-year maturity than other types of investors.

Industry executives point out that issuing bonds in Taiwan suggests Intel believes the NT-dollar will not devalue in the long term, adding that many heavyweight multinationals have recently sold bonds in Taiwan partly because of lower bond interest here than the average on the international market, and that Intel has huge appetite for cash due to the acquisition deal and its spending on the development of 10nm process technology.

In early June, Intel was reportedly planning to sell its first bonds in Europe in euros or in pounds.

The Intel bond sale has been so far the third largest in Taiwan if denominated in US- dollars, next only to AT&T's US$2.6 billion issuance in February this year and US$1.3 billion sale in November last year.

So far this year, 73 bonds including Intel's have been issued in Taiwan, bringing the total capital these bonds have raised to US$19.5 billion.

Taiwan's financial executives point out that Taiwan's environment for bond sale is relatively attractive because of abundant idle money and flexible sale terms.