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Study of the Fund Raising Strategies of Semidonductor Companies: The Case of Inotera Memories Inc.
Funding Straegy,Capital Structure,Weight Average Cost of Capital,
|Publication Year :||2007|
|Abstract:||台灣已是世界上半導體產能的重要來源。現成良好的產業基礎與規模，預期未來將繼續在本島內發展﹔實際上，根據已宣佈的公開資訊，在計劃中的12吋半導體晶圓製造廠超過十五座以上。由於半導體的設計與製程技術不斷進步，每座晶圓廠需要投入的總成本將越來越高﹔更不用提現有晶圓製造廠經常性技術升級所必需的資本支出了。因此，國內半導體晶圓製造廠的現有與未來經營上的風險主要是在(1) 技術進步，(2) 經常性資本支出的融資。當每一次的資本支出的基本單位已經成為十億美金左右時，國內半導體晶圓製造廠的融資策略未來益發重要。
Taiwan has become an important souce of capacity in the global semiconductor industry. To date, the local semiconductor industry’s excellent infrastructure and economy of scope are expected to continue to improve in the future. In fact, based on publicly available information, more than 15 new 12”fabs are currently under planning. However, as semiconductor design and process technologies are constantly improving, the investment amount for each fab is becoming more and more expensive, not to mention the regular capital expenditure needs from existing technology migration. As a result, local semiconductor manufacturers’ present and future business risks lay on (1) technology migration, and (2) funding for regular capital expenditure needs. As the basic investment amount has climbed to the US$1 billion mark, the funding strategies of local semiconductors have become more important than ever.
This research first covered the characteristics of the semiconductor industry to demonstrate the capital-intensive nature of the industry and the large amount of regular capital expenditure needs. Then, the research encompassed the funding strategies of local semiconductor manufacturers, with an emphasis on DRAM manufacturers’ needs for long term capital funds, establishing an understanding of the challenges and conditions for successful fund raising of their funding strategies.
This research followed through by reviewing previous thesis paper related to capital structure and local semiconductor manufacturers’ funding strategies. This research covered Inotera Memories Inc., as a case study to evaluate its funding strategy to raise up to NT$200 billion for its fab 1 and 2, its decision logics and successful execution. The optimum capital structure for Inotera to achieve its lowest weighted average cost of capital was examined, in an effort to indicate a strategic direction for the Company and other semiconductor manufacturers.
This research uncovered that local semiconductor manufacturers’ funding strategies, especially DRAM manufacturers’ ones, have been dependent on the successful issuance of cash injections (including global deposit receipts). It has been vital for local DRAM manufacturers to successfully raise cash in either local or international capital market which, in turn, effectively increases their debt capacity and, combined with the internally generated funds from deprecation, both to finance the regular capital expenditure needs. The result is different from the preference of the pecking order theory. The case study also indicated a deviation that the successful issuance of seasoned public offering and GDR to increase its debt capacity was imperative to Inotera’s fab 2 investments which will amount to US$2.3 billions.
To evaluate Inotera’s funding strategy, this research manifested the result of the calculation of Inotera’s weighted average cost capital, and pointed out that the 1:1 leverage ratio, common to local semiconductor manufacturers, would not achieve the lowest weighted average cost of capital to Inotera. As a rule, local semiconductor manufacturers ought to decrease their financial leverages to decrease their overall business risk. Therefore, the research concluded by suggesting Inotera should decrease its financial leverage to achieve its lowest weighted average cost of capital.
|Appears in Collections:||財務金融組|
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