Introduction
Taiwan Semiconductor Manufacturing Company (TSMC) is taking decisive action against the pressure caused by the strengthening New Taiwan dollar (NTD). The world’s largest chipmaker announced a $10 billion capital raise through its financial investment arm, TSMC Global Ltd. This move is designed to reduce foreign exchange hedging costs and protect profit margins amid a rapid rise in the local currency.
Overview in 5 Points
TSMC’s financial arm plans a $10 billion capital raise to cut rising forex hedging costs.
The New Taiwan dollar (NTD) has surged over 11.5% against the US dollar in 2025.
Currency strength threatens Taiwanese exporters’ profits, including TSMC’s operating margins.
TSMC chairman estimates a 1% NTD appreciation lowers operating margin by 0.4 percentage points.
The capital injection aims to strengthen TSMC’s financial position amid currency volatility.
The Currency Challenge: NT Dollar Surge
Since early 2025, the NTD has appreciated by more than 11.5% against the US dollar. This sharp rise creates challenges for Taiwan’s export-driven economy, especially for companies like TSMC that earn significant revenues in foreign currencies.
A stronger NTD means when foreign earnings convert back to local currency, companies receive fewer Taiwanese dollars.
This erodes profit margins, impacting their ability to invest in technology and innovation.
Last month, the NTD surged nearly 7%, fuelled by market speculation that the US pressured Taiwan to allow currency appreciation as part of ongoing trade and tariff discussions.
Taiwan’s central bank rejected these claims but acknowledged the local currency’s strength.
The appreciation continued amid escalating geopolitical tensions, including conflicts in the Middle East. As of yesterday, the NTD closed at NT$29.391 per US dollar, its highest level in over three years.
The US Federal Reserve’s recent dovish tone on interest rates also contributed to this trend.
Strategic Financial Response: $10 Billion Capital Raise
TSMC Global Ltd, registered in the British Virgin Islands, oversees TSMC’s financial investments. In a recent board meeting, the company approved a rights issue to raise $10 billion.
This capital boost aims to lower the costs of hedging foreign exchange risk in an environment where the NTD continues to strengthen.
TSMC’s board of directors had earlier agreed in February to inject up to $10 billion into TSMC Global, giving the financial arm greater capacity to manage currency risks.
Chairman C.C. Wei highlighted the financial impact of the currency movement: every 1% increase in the NTD’s value cuts TSMC’s operating margin by approximately 0.4 percentage points. This emphasizes the urgent need for effective forex risk management.
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The Marathon Runner Analogy: Navigating a Steep Uphill
Picture TSMC as a top marathon runner navigating a sudden steep hill. The hill represents the rapid appreciation of the NT dollar.
Each step becomes more strenuous, threatening the runner’s pace and endurance.
By raising $10 billion in capital, TSMC equips itself with stronger shoes and better gear, enabling it to tackle the climb without losing ground.
The financial boost provides the necessary tools to absorb currency shocks while maintaining its competitive edge in the global semiconductor race.
New Taiwan Dollar vs. US Dollar (2025)
| Month | NTD/USD Change | Key Market Drivers |
|---|---|---|
| January | +1.5% | Rising US interest rate expectations |
| February | +2.3% | Early trade talk rumors |
| March | +1.7% | Global geopolitical concerns |
| April | +3.0% | Middle East tensions increase |
| May | +3.5% | Fed’s dovish rate signals |
| Total | +11.5% | Combined currency appreciation |
Conclusion
TSMC’s $10 billion capital raise through TSMC Global Ltd is a smart and necessary response to the rising New Taiwan dollar. This move aims to reduce foreign exchange hedging costs and protect the company’s margins.
In a global market defined by fierce competition and fast currency shifts, TSMC’s proactive financial strategy helps ensure it maintains its technological lead. Much like a skilled marathoner preparing for a sudden uphill stretch, TSMC strengthens its footing to continue the race without faltering.
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