Samsung eyes $1bn bond issue for Austin fab expansion

KOREAN ELECTRONICS GIANT Samsung is considering issuing its first overseas bonds in almost 15 years as it plans building a second fab in the US.

Samsung Group's $42bn foreign expansion plans include expanding its electronics business, which already supplies many customers with everything from chips to displays. The firm had stated its desire to build a NAND plant outside China and is making arrangements to float a $1bn bond issue to finance expansion of its fab in Austin, Texas.

According to Bloomberg, Samsung has sent proposals to banks to borrow up to $1bn by issuing five year bonds through Samsung's US subsidiary. Investors might be interested in buying Samsung bonds due to the perceived stability of the firm, which has $19bn in cash reserves.

Samsung fabs Apple's A4 and A5 processors and its own chips that are found in many mobile devices. As smartphone and tablet demands grow, the markets for processor chips and NAND memory are set to explode.

Samsung is waiting for the Korean government to green light its proposal to build a NAND factory in China. It is likely that the firm wants to hedge its bets by expanding existing fabs rather than simply waiting for the government to give it the go-ahead.

Samsung's Austin fab has been running at capacity since October, and the firm seems to be keen to expand operations in Texas. Retooling existing plants has significant time advantages, however the company knows it will need more plants to continue ramping up production capacity. µ