TSMC Issues $100 Billion Shares to Hedge Currency Risks Amid NT Dollar Surge

TSMC Global Ltd., a subsidiary of Taiwan Semiconductor Manufacturing Company (TSM.US), has announced plans to issue $100 billion worth of new shares. This move is aimed at strengthening its foreign exchange hedging operations, marking the largest such initiative by the company to date. The issuance is the third of its kind since 2024 and comes at a time when the New Taiwan Dollar has been appreciating, posing challenges for the region's export-oriented economy.

The recent surge in the New Taiwan Dollar has raised concerns about the region's over-reliance on exports. In May, the currency experienced its largest single-day increase since the 1980s, prompting officials to call for measures to curb speculative trading. The volatility in the foreign exchange market has led to increased margin requirements for banks, making it crucial for companies to have sufficient liquidity to meet these demands.

The issuance of new shares will provide TSMC Global with greater financial flexibility in managing currency risks. This is particularly important for a company like TSMC, which is a major supplier of chips to global tech giants such as Apple and Nvidia. The appreciation of the New Taiwan Dollar can erode the profits of exporters, as the dollars earned from overseas sales convert to fewer local currency units, or force them to raise prices, potentially reducing demand.

TSMC's CEO, C.C. Wei, had earlier indicated that the company's operating profit margin had decreased by a few percentage points due to the local currency's appreciation. The issuance of new shares is a strategic move to mitigate these risks and ensure the company's financial stability in the face of currency fluctuations. By injecting a significant amount of cash through the issuance, TSMC Global aims to meet the margin requirements for its existing and new hedging operations, thereby safeguarding its financial health.