Why Buffett’s Berkshire Hathaway is betting on Tsmc chips
Berkshire Hathaway has bought shares in Taiwanese chip maker TSMC for more than $4 billion. It's an unusual move for Warren Buffett's holding company. All the details
Berkshire Hathaway, the US holding company led by Warren Buffett, has announced that it has purchased shares of the Taiwanese semiconductor company TSMC worth more than 4.1 billion dollars.
HOW TSMC'S SHARES ARE PERFORMING
The news sent TSMC's shares up 7.9 percent on the Taiwan Stock Exchange. Shares of the company – the largest contract microchip maker on behalf of customers like Apple or NVIDIA – hit a two-year low last month on a significant slowdown in global demand for chips.
TSMC reported an 80 percent increase in quarterly profits last month, however it was cautious about future semiconductor demand.
TSMC'S FOREIGN INVESTORS
Last September 30, it appeared that Berkshire Hathaway possessed TSMC's American depositary receipt (that is, the company's listing certificates on the United States market) for a total of 60.1 million. TSMC's overseas investors also include asset management firms BlackRock and Vanguard Group, and Singaporean sovereign wealth fund GIC.
BERKSHIRE HATHAWAY'S CAUTION TOWARDS TECHNOLOGY INDUSTRY
Berkshire Hathaway rarely makes such large investments in the tech industry, Reuters noted.
Tom Russo, a partner at investment firm Gardner, Russo & Quinn, told Reuters that he "suspects that Berkshire believes the world cannot do without products made by TSMC," not least because "only a small number of companies is able to accumulate the necessary capital for the production of semiconductors, which are increasingly important for people's lives”: they are crucial components for consumer electronics, for example.
Berkshire Hathaway's forays into the tech sector haven't always been lucky. The bet on the computer company IBM has not paid off, for example, but the bet on Apple – which Warren Buffett considers not so much a technology company as a company that offers consumer products – has. The $126.5 billion investment in Apple is the largest among those in Berkshire's $306 billion equity portfolio.
THE DISINVESTMENT FROM BYD
A couple of months ago, Berkshire Hathway began a process of trimming its multibillion-dollar stake in BYD , China's largest electric-car maker.
Fearing getting caught up in the political-economic tensions between the United States and China, BlackRock recently postponed indefinitely the launch of an exchange-traded fund (ETF) that invests in Chinese bonds .
BERKSHIRE HATHAWAY'S OTHER MOVES
In the third quarter of 2022 Berkshire Hathaway increased its holdings in oil companies Chevron and Occidental Petroleum and media conglomerate Paramount Global, among others. Instead, he sold shares in automaker General Motors, banking firm Bank of New York Mellon and video game company Activision Blizzard.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-berkshire-hathaway-di-buffett-punta-sui-chip-di-tsmc/ on Wed, 16 Nov 2022 06:48:12 +0000.