Warren Buffett’s holding company Berkshire Hathaway has reportedly cut its position at TSMC by 86%. CNN report Quote Submissions to regulatory authoritiesThe investment firm also purchased additional Apple stock. Whether Berkshire sold his TSMC stake because it expected demand for consumer electronics and personal computers to soften, or the risk of China invading Taiwan and threatening the value of the world’s largest chip maker. It is not clear whether this was due to concerns about rising prices.
Berkshire Hathaway dumps TSMC
according to Report from Reuters, Berkshire Hathaway held $4.1 billion in 60 million American depository shares in TSMC shares last November after significantly increasing its position. After selling his 86% stake, the company now holds 8.3 million American Depositary Shares worth $618 million, according to disclosures to the SEC. TSMC shares fell 4% on Wednesday after the filing was filed.
As an investment firm, Berkshire Hathaway understandably does not disclose why it buys or sells shares in particular companies. Note, however, that when Warren Buffet’s company bought his stake in TSMC last November, the world’s number one foundry appeared impervious to softening demand for chips for consumer electronics. need to do it. However, the company has recently suggested that demand for its services will be lower in 2023 than it was last year.
Berkshire Hathaway’s sale of TSMC shares boosted its position at Apple.
Samsung competes with Intel
For now, TSMC is the world’s largest foundry with the undisputed technological lead, and will remain No. 1 for quite some time, but increasing competition and the risk of a Chinese invasion put the company at risk. There are certain risks.
Samsung Foundry is also a strong contract maker of chips, but it lags TSMC in both available capacity and yields at advanced nodes. But as Samsung invests tens of billions of dollars in manufacturing capacity each year, continues to improve its manufacturing processes and accelerate the pace of progress, the threat to TSMC will grow over time.
Intel Foundry Services has ambitious plans to become the second largest foundry in the world. I don’t know if it will succeed, but I do know that Intel has a very ambitious roadmap of production nodes and substantial production capacity that is only going to get bigger and bigger. Year.
Neither Samsung Foundry nor IFS will displace TSMC anytime soon. The company will continue to be “everyone’s foundry” and the number one contract manufacturer of chips for the foreseeable future. However, with increased competition from 2024 to his 2025, TSMC will not be able to raise prices and become more profitable virtually overnight. As a result, it probably doesn’t make much sense for an investment firm to hold onto his recently purchased TSMC stock for a few more years, as TSMC won’t always be as profitable as it is now.
Chinese invasion risk
Another reason Berkshire Hathaway no longer wants to own billions of dollars worth of TSMC stock. There is a growing risk of China invading Taiwan. Earlier this month, CIA Director William Burns said China could invade the island by her 2027.
“As a matter of intelligence, [Xi had ordered his country’s military to be ready to invade the democratic island by 2027]According to , Burns said: RFA“That doesn’t mean he decided to invade in 2027 or any other year, but it is a reminder of the seriousness of his focus and ambition.” I don’t intend to.”
Some intelligence and military experts said last year that China could invade Taiwan as early as 2025. A top US military publication evacuated fab personnel to TSMC last year because TSMC could produce chips with cutting-edge technology and such chips could enhance China’s military potential. urged to Destroy his TSMC fab on the island. Taiwan’s National Security Agency says that without access to advanced production tools from companies like ASML, Applied Materials, KLA, Lam Research and Tokyo Electron, TSMC’s fabs are worthless and need not be destroyed. claimed.
But whether TSMC’s fabs are seized by China, destroyed, or left without equipment, foundry inventories are rapidly worthless if China invades.
Whether Berkshire Hathaway is dumping stocks for short-term profitability concerns, medium-term uncertainty related to increased competition in the foundry market, or long-term risks related to a Chinese invasion. , only the company knows. TSMC remains the world’s top contract manufacturer of semiconductors for now, but that position hasn’t been as stable as it has been for several years between 2020 and 2022.
