By Mauro Orru


European chip maker STMicroelectronics is seeking to raise $1.5 billion through a bond sale, turning to an instrument that lets investors get exposure to shares that have nearly tripled in value this year on a wave of investor fervor around artificial intelligence.

The company, which counts Elon Musk's SpaceX and Tesla among its largest clients, said it was offering two tranches of senior unsecured bonds that can be converted into new or existing ordinary shares. Each tranche will have a size of $750 million, with maturities of five and seven years, respectively.

Convertible bonds represent a way for investors to get in on big potential returns for stocks as, in many cases, they get their cash back if debt matures without shares hitting a price target. The group said it would channel proceeds into the early redemption of $750 million zero-coupon convertible bonds due 2027, and other general corporate purposes.

STMicroelectronics shares in Milan shed more than 4% on Tuesday. However, the stock has nearly tripled since the year began as investors poured money into companies with exposure to a semiconductor industry that is key for the data centers behind the AI boom.

Several European tech stocks have notched big gains lately, including Dutch semiconductor-equipment maker ASML Holding, German chip maker Infineon Technologies and French semiconductor-materials maker Soitec.

Companies are pledging hundreds of billions of dollars in capital expenditures to build AI infrastructure to the benefit of the semiconductor industry. Earlier this month, STMicroelectronics lifted its data-center revenue target for the year to about $1 billion compared with a prior forecast of more than $500 million.

STMicroelectronics' bond sale announcement comes a day after The Wall Street Journal reported that Nvidia was poised to issue $25 billion of new bonds in its first bond sale since 2021, and weeks after Google owner Alphabet unveiled plans to issue $80 billion in equity to finance capex tied to AI.

STMicroelectronics said its bonds due 2031 would carry no interest with an initial conversion price of $119.9813, a 55% premium. Bonds due 2033 will bear interest at an annual rate of 0.625% with an initial conversion price of $121.9165, a 57.5% premium.

The company said it expects settlement for the new convertible bonds to take place on or around June 23.


Write to Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

06-16-26 1243ET