As a result of Berkshire Hathaway’s disclosure in SEC filings that the investment company had acquired a sizable stake in the Taiwanese chip manufacturer, shares of the Taiwan Semiconductor Manufacturing Company (TSMC) increased in the secondary market.
At a time when the semiconductor industry is experiencing a wider downturn and share prices of both manufacturers and sellers have lost significant amounts of their value due to hawkish stances and macroeconomic uncertainty, the firm, known for its cautious investment approach and largely disregarding technology stocks, scooped up a little over 60 million shares of the chipmaker.
As the source of semiconductors for some of the biggest companies in the world, TSMC has recently emerged as one of the most significant nations in the world. Apple is its biggest client, and the company’s reliance on it has only grown over time, especially after Apple introduced its line of notebook processors. However, even before that, the business switched from a dual-sourcing strategy it had earlier adopted, in which it also bought some of its chips from Samsung, to relying only on TSMC to produce its chips.
The largest investment made by Berkshire Hathaway is Apple, in which the company has a staggering $123 billion stake, according to its most recent SEC filing. But TSMC, the newest addition to the portfolio, has seen a whopping $4.1 billion investment from the illustrious investing house of Warren Buffett. The market value of TSMC is currently $359 billion, and its shares increased by about 6% in after-hours trading after Berkshire Hathaway submitted its most recent 13-F report to the Securities and Exchange Commission (SEC) at yesterday’s market closure.
Aftermarket trading saw the shares close at $77 following nearly two months of stock market losses. These American depository receipts (ADR) began trading at $133 in January of this year before rising to a top of just under $141 at a time when neither the Russian invasion of Ukraine nor the Federal Reserve’s aggressive anti-inflation strategy had begun.
The ADRs lost more than half of their value at the beginning of this year, thus 2022 was not a good year for TSMC because they bottomed out at $59.43 during the second half of the year.
At least for Berkshire, whose most recent portfolio is valued at $296 billion, these worrying times for the chipmaker appeared to be the ideal time to buy shares. The economic turbulence has also had an impact on TSMC, which was compelled to cut back on capital expenditures for the most recent quarter of this year due to a slowdown in order volume and equipment deliveries that were delayed. The automotive industry experienced a mismatch between its orders and the market demand for automobiles when it reduced orders in the wake of the coronavirus pandemic, forcing the fab to scramble to satisfy demand.
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