Berkshire Hathaway has bought more than US$4.1-billion of stock in Taiwan’s TSMC, a rare significant foray into the technology sector by billionaire Warren Buffett’s conglomerate.
The news sent shares in TSMC up more than 6% in Taiwan on Tuesday, as it boosted investor sentiment for the world’s largest contract chip maker, which saw its shares hit a two-year low last month due to a sharp slowdown in global chip demand.
In a Monday regulatory filing describing its US-listed equity investments as of 30 September, Berkshire said it owned about 60.1 million American depositary shares of TSMC.
I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi
While Berkshire does not normally make big technology bets, it often prefers companies it perceives to have competitive advantages, often through their size.
TSMC, which makes chips for the likes of Apple, Qulacomm and Nvidia, posted an 80% jump in quarterly profit last month, but struck a more cautious note than usual on upcoming demand.
“I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares.
“Only a small number of companies that can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” he added.
Berkshire has had mixed success in technology.
Its more than six-year wager during the last decade in IBM did not pan out, but Berkshire is sitting on huge unrealised gains on its $126.5-billion stake in Apple, which Buffett views more as a consumer products company.
Apple is by far the largest investment in Berkshire’s $306.2-billion equity portfolio. Buffett, 92, has run Berkshire since 1965.