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TSM produces semiconductors for Nvidia, Qualcomm and Apple
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Overtook Intel as the most advanced chipmaker
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It is Buffett’s first investment in the semiconductor sector.
Berkshire Hathaway of Warren Buffett acquired a stake of more than US$5,000 million in Taiwan Semiconductor Manufacturinga company that produces semiconductors for Nvidia y Qualcommand is the exclusive supplier of silicon chips for Apple.
Everything indicates that the “oracle of Omaha” believed that the Taiwanese manufacturer had bottomed out after a liquidation of more than US $ 250,000 million. By Tuesday, after the purchase was disclosed, TSMC shares rose more than 9.4%, their biggest intraday gain in more than two years, a report from Bloomberg.
In a filing with the US Securities and Exchange Commission on Monday, Berkshire Hathaway said it had acquired about 60 million American depository shares (ADRs) from TSMC in the past three months through September.
“TSMC welcomes all investors who are inclined to buy and hold shares,” a spokesman for the chipmaker said, quoted by CNN Business.
The Taiwanese company designs about 90% of the world’s most advanced chips and supplies tech giants like Apple with the most valuable single stake in Berkshire’s portfolio.
tensions with china
The US conglomerate’s move comes as tensions rise between China and the autonomous island, which has faced increasing military aggression in recent months. Hence Taiwan’s role in the global chipmaking industry has become a serious topic of conversation.
The semiconductor chips produced by TSMC are difficult to manufacture due to the high cost of development and the level of knowledge required, which means that much of the production is concentrated at just a handful of suppliers. The company is so important to the island that its employees can request not to participate in the reserve’s military training.
Tensions between Washington and Beijing have also risen lately over chips.. During his meeting in Bali for the G20 leaders’ summit, Joe Biden told that he has not changed his One China policy, but reiterated that he opposes “any unilateral change in the status quo” by any of the the parts.
Biden also imposed a broad set of controls on Chinese companies on the sale of advanced chips and their manufacturing equipment, specifically to prevent them from reaching the hands of the Chinese military. Some experts fear that this will drag the technological arms race between the two world powers to an unprecedented level.
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This Tuesday, Taiwan thanked the US president for reiterating his “support and commitment” to the islandwhich China claims as its own, while Xi issued warnings that Taiwan is “the first red line that should not be crossed” and assured that he hopes the US will not support eventual independence for the island.
“Anyone who seeks to separate Taiwan from China will be violating China’s fundamental interests, and the Chinese people will never allow it. We hope to see peace and stability in the Taiwan Strait, but peace and Taiwan’s ‘independence’ are irreconcilable,” Xi said.
Why did Warren Buffett’s stance change?
The 92-year-old entrepreneur had long walked away from the tech industry, arguing that he didn’t want to invest in businesses he didn’t fully understand. But in recent years he has devoted an increasing proportion of his company’s investments to the technology sector.
Chip manufacturing promises sustained growth for the coming yearsas it is essential for the expansion of emerging industries such as cyber defense, electric and self-driving cars, artificial intelligence and smart home applications.
Robert Schiffman, a Bloomberg analyst, spoke of “an outperformance by 2023” as investors weigh the potential for a recession. “Tight spreads and limited downgrades support the strength of the sector,” he said.
TSMC, which replaced Intel Corp As the most advanced company in the manufacture of cutting-edge chips, it has also become “a strategically vital player at a time when the US and China have clashed for leadership in the global technology industry,” Schiffman said.
Shares of TSMC in Taiwan had fallen 28% as of Monday’s close, as demand for ch
ips slowed with the economic downturn and investors worried about oversupply.
In October, the company let it be known that it had reduced capital spending to about $36 billion, down from at least $40 billion previously planned.
Jordan Klein, an analyst at the Mizuho financial group wrote Tuesday that the investment was Buffett’s first in semiconductors in the course of his career “so it does matter” and TSMC is “at its best for quality.”
He also opined, quoted by MarketWatchthat Wall Street’s 2023 estimates for TSMC “still seem too high,” while “the risk of a Chinese invasion is not necessarily zero.”