Buffett bets $5 billion on chipmaking with new stake in TSMC

(Bloomberg) – Berkshire Hathaway Inc. Warren Buffett’s shares have bought about $5 billion worth of shares in Taiwan Semiconductor Manufacturing Company, revealing their holdings in the world’s top chipmaker as part of a change. portfolio in the previous quarter. Stocks skyrocketed.

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The Omaha-based group purchased approximately 60 million US depository receipts at TSMC in the three months ended September, the group said in a filing. The Taiwanese company makes semiconductors for customers like Nvidia Corp. and Qualcomm Inc., and is the exclusive supplier of Apple Inc.’s custom Silicon chips. Apple remains the most valuable stock in Berkshire’s portfolio.

Assuming Buffett bought TSMC’s ADR at the third-quarter average price, that stake would cost him $5.1 billion. They are currently trading at $72.80. TSMC shares jumped as much as 5.1% in Taiwan after the disclosure.

Buffett, 92, has long shied away from the tech industry, making him reluctant to invest in businesses he doesn’t understand well. However, that stance has changed in recent years, and he has spent an increasing proportion of his company’s investments in the technology sector.

Chip manufacturing is a segment that promises sustained growth in the coming years as it is needed for the expansion of nascent industries such as self-driving and electric cars, artificial intelligence and home applications. family is connected. The expansion of cloud services such as AWS by Inc. also promises to bring more silicon orders to large data centers.

What Bloomberg Intelligence Says

The tech industry’s bold red bond yields this year could mask the strong cash flows and solid balance sheets that underpin the sector. These characteristics could lead to an outsized performance in 2023 as investors weigh the possibility of a recession. Low spreads and limited rating downgrades underpin the strength of the industry.

— Robert Schiffman, analyst BI

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TSMC, having taken over from Intel Corp. As a company that promotes advanced chip manufacturing technology, it has also emerged as a key strategic player at a time when the US and China clash over leadership positions in the global technology industry. Taiwan’s most valuable company has the manufacturing capacity to create the world’s most advanced chips, which are instrumental in driving the future commercial industries of every country such as electric vehicles and smart phones. artificial intelligence, while also nurturing their military and cyber defense ambitions. The United States has imposed enhanced sanctions on high-end chips made for Chinese customers, especially to prevent them from falling into the hands of the Chinese military.

Biden’s Chip Curbs beats Trump in forcing the world to align with China

Shares of TSMC in its home country of Taiwan are down 28% this year through Monday, as demand for chips slows along with the economic slowdown and investors worry about oversupply. In October, the company said it had reduced capital spending to about $36 billion this year, which would still be a record high, down from at least the $40 billion previously planned.

(Updated with Taiwan transaction in third paragraph)

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