Hon Hai Precision Industry Co., Taiwan’s largest electronics manufacturer, is tapping the bond market to finance its ambitious artificial intelligence server plans. The company priced its first overseas unsecured convertible bond of 2024 at NT$300 (US$9.33) per share, a 43.8% premium over its recent closing price.
The US$700 million offering aims to fund overseas material purchases, likely for components of Nvidia Corp.’s GB200 AI servers. Hon Hai plans to begin production of these high-value servers in November, with full-scale manufacturing slated for 2025.
Chairman Young Liu has highlighted the “crazy” demand for Nvidia’s Blackwell-based servers, prompting Hon Hai to establish what it claims will be the world’s largest GB200 server production base in Mexico. The company’s vertical integration capabilities, providing up to 90% of components excluding GPU and CPU chips, position it as a key partner for system manufacturers.
While the bond issuance could dilute existing shareholders by 0.54% if fully converted, Hon Hai expects the impact to be limited. The move mirrors competitor Quanta Computer Inc.’s recent US$1 billion convertible bond offering, underscoring the industry’s push to secure funding for AI server production.
