Warren Buffett of Berkshire Hathaway revealed in an interview with CNBC Japan that his firm’s shocking decision to sell its multibillion-dollar stake in TSMC, which caught many off guard earlier this month, was made by him. Mr Investment Buffett’s firm stunned the investment world in late 2022 when it purchased a massive $4.1 billion stake in TSMC during the third quarter of 2022, becoming the firm’s largest investor. However, a quarter later, Berkshire sold the majority of its holdings, a surprising move for the firm, which prides itself on investing, buying, and holding shares for decades.
According to Berkshire’s filings with the Securities and Exchange Commission (SEC), the company reduced its investment in Taiwan Semiconductor Manufacturing Company by 86% during Q4 2022. Immediately following the filing, speculation about the firm’s decision began, with some believing that a Buffett manager had sold the shares. Others, on the other hand, claimed that Berkshire’s withdrawal was due to the geopolitical risk surrounding TSMC.
Although Taiwan Semiconductor Manufacturing Company is the world’s largest contract chip manufacturer, all of its high-end chip production facilities are located in Taiwan. Because of Taiwan’s proximity to China and the two countries’ tensions, both investors and TSMC customers are concerned about the security of these facilities.
Mr. Buffett confirmed that he was the one who decided to sell TSMC shares as part of his spending spree in Japan, where he has purchased five Japanese trading houses.
In an interview with CNBC’s Becky Quick, he explained his thought process and added that TSMC is a great company, but its location in Taiwan leaves critical factors out of its control. Others, including Intel CEO Patrick Gelsinger, have expressed concern about a potential conflict between Taiwan and China, as well as the impact on the global semiconductor supply chain.
The investor made the remarks as TSMC’s revenue for March 2023 fell to its lowest level since October 2021. However, it maintained a broader uptrend that has seen the company’s sales skyrocket as the personal computing and technology markets expand and chips are used in everything from cars to smartphones.
Following TSMC’s revenue announcement, investment and research firms weighed in. Morgan Stanley had warned before the release that TSMC would have another difficult quarter in Q2, which could cause the firm to lower its revenue forecast for 2023. JPMorgan added to this post release, revealing that the Taiwanese chipmaker’s problems were caused by an order cutdown.
It confirmed Morgan Stanley’s forecast that revenue would continue to fall in the current quarter. JPMorgan also believes that, while 2023 will be a difficult year for TSMC, the company will expand in 2024 as economies recover from inflation and other constraints.
Wedbush was surprised by the magnitude of TSMC’s revenue decline in March, noting that the slowdown was not only significant but also unexpected given that revenue figures rarely deviate from TSMC’s guidance because the company has adequate visibility into its product output and shipments.
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