UMC Stock Slides After $1.8B Convertible Bond Pricing — Proceeds To Fund Equipment, Plant Expansion

• The two bond tranches are scheduled to be issued on Oct. 13, with one maturing in 2031 and the other in April 2028.
• If all of the bonds are converted at their initial conversion prices, UMC estimates the resulting dilution to existing shareholders at approximately 2.34%.
• In July, the company raised its 2026 capital expenditure budget to $2 billion.

United Microelectronics Corp. (UMC) shares tumbled more than 11% on Monday after the Taiwanese chipmaker disclosed pricing terms for $1.8 billion of overseas convertible bonds.

The offering consists of two $900 million tranches with a 0% annual coupon, according to a filing with the U.S. Securities and Exchange Commission (SEC). The bonds can ultimately be converted into newly issued UMC common shares.

Tranche A bonds are convertible at an initial NT$202.06 ($6.37) per share, a 32.5% premium to UMC's NT$152.50 ($4.81) close on Oct. 5, while Tranche B bonds convert at NT$179.19 ($5.65), a 17.5% premium.

If all of the bonds are converted at their initial conversion prices, UMC estimates the resulting dilution to existing shareholders at approximately 2.34%. The company described the dilution ratio as “limited.”

Use Of Proceeds

UMC said proceeds from the offering will be used to purchase machinery and equipment and construct plant facilities. The two bond tranches are scheduled to be issued on Oct. 13, with one maturing in 2031 and the other in April 2028.

The financing comes as UMC increases spending on manufacturing capacity. In July, the company raised its 2026 capital expenditure budget to $2 billion after its board approved plans to expand cleanroom capacity at its Singapore P4 facility and to build a new fab in Tainan, Taiwan.

UMC said the plan will be executed in phases, allowing it to deploy capacity flexibly to meet customer demand while maintaining capital discipline. CEO Jason Wang said the company must prepare in advance to capture future AI-driven opportunities.

The Singapore expansion includes additional silicon-photonics capacity, while the Tainan project will provide space for future manufacturing phases.

Capacity Expansion Follows Stronger Demand

UMC reported second-quarter (Q2) revenue of NT$68.73 billion (US$2.17 billion), up 17% from a year earlier, while wafer shipments increased 10.6% sequentially. Revenue from its 22- and 28-nanometer technologies accounted for 37% of quarterly wafer revenue.

The company said in July that it expects third-quarter (Q3) wafer shipments to increase by a high-single-digit percentage sequentially and capacity utilization to exceed 90%.

Retail Investor Sentiment Around UMC Stock

On Stocktwits, retail investors’ sentiment around UMC stock remained ‘bullish’ amid high message volume.

So far this year, UMC stock price has nearly tripled, surging over 197%. In comparison, the Golden Eagle Dynamic Hypergrowth ETF (HYP), which holds the stock, has risen more than 25% over the same period.

(Exchange Rate: NT1 = $0.031516) 

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