Warren Buffett has sold nearly all of his TSMC stock, citing geopolitical tensions

AppleInsider

Berkshire Hathaway CEO Warren Buffett sold all but a handful of his stake in Taiwanese iPhone chipmaker TSMC, mere months after buying it.

Warren Buffett. Image credit: Berkshire Hathaway

Buffett invested greatly in TSMC during 2022, to an amount later reported to be in excess of $4.1 billion. However, Berkshire Hathaway then sold about 85% of its shares in February 2023.

According to Nikkei Asia, Buffett is now in Japan, meeting with five local trading houses. In an interview with the publication, he said he was "very proud" of Berkshire Hathaway's investments in Japanese companies.

Buffett also said that TSMC is a well-managed company, but reportedly explained that Berkshire Hathaway has better places to deploy its capital. International trade tensions were also "a consideration" in the decision to sell.

Buying and selling shares in only a few months is unusual for the company. Normally Buffett and Berkshire Hathaway appear to invest for the long term, which includes owning a considerable sum of Apple shares.

Separately, TSMC was reported in December 2022 to have tripled its investment in a new chip factory in Arizona. More recently, the firm has criticized American workers, and also suggested that its plans for further US expansion may be halted over tax issues.

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bluelightning

Buffett made most of his money in the insurance business.  
He famously saved GE from bankruptcy around 2008-2009, then sold his investment at a big gain some years later.  
By the way, he bought a class of shares and class of bonds that GE employees and most others could not buy.  
I can think of several other investments he has sold after a few years (sometimes shorter).  
Early in life, he was more of a cigar butt investor (very deep value).  His first investment was around 1942.  
Buffett has never invested in MSFT, to avoid possible insider trading due to friendship with the family.  
Buffett has recently distanced himself from Bill Gates, due to recent information revealed during Gates divorce.  

Suspect TSMC (TSM) will do just fine without Buffett's investment.  
TSMC already has two foundries under construction in AZ (one should be producing chips shortly).  
Mildly concerned that both TSMC and INTC are building several plants in areas prone to drought.  
Plans exist to bomb plants in Taiwan, should China invade.  
TSMC's approach is now being imitated by INTC, which just signed a big agreement with ARM.  

INTC is spreading new foundries around the world.  
Looks like IBM is also adding to chip foundries and partnerships in US, Japan and elsewhere (also has a long-standing Canadian chip plant).  
TXN and many other chip manufacturers have expansion plans (many in areas other than computers or cell phones, such as cars and telecommunications).  

edited April 2023

mikethemartian

He is still indirectly heavily invested in TSMC since they manufacture Apple’s main chips.

bluelightning

JP234 said:

BlueLightning said:

Buffett made most of his money in the insurance business.  
He famously saved GE from bankruptcy around 2008-2009, then sold his investment at a big gain some years later.  
By the way, he bought a class of shares and class of bonds that GE employees and most others could not buy.  
I can think of several other investments he has sold after a few years (sometimes shorter).  
Early in life, he was more of a cigar butt investor (very deep value).  His first investment was around 1942.  
Buffett has never invested in MSFT, to avoid possible insider trading due to friendship with the family.  
Buffett has recently distanced himself from Bill Gates, due to recent information revealed during Gates divorce.  

Suspect TSMC (TSM) will do just fine without Buffett's investment.  
TSMC already has two foundries under construction in AZ (one should be producing chips shortly).  
Mildly concerned that both TSMC and INTC are building several plants in areas prone to drought.  
Plans exist to bomb plants in Taiwan, should China invade.  
TSMC's approach is now being imitated by INTC, which just signed a big agreement with ARM.  

INTC is spreading new foundries around the world.  
Looks like IBM is also adding to chip foundries and partnerships in US, Japan and elsewhere (also has a long-standing Canadian chip plant).  
TXN and many other chip manufacturers have expansion plans (many in areas other than computers or cell phones, such as cars and telecommunications).  

Sounds reasonable. If you ignore the geopolitical concern that China will invade and take over Taiwan and its industries. Is it possible that those concerns are what drove this Bershire Hathaway action? There's certainly a lot of historical precedent, in Macao and Hong Kong, isn't there?

I bought into TSMC when tensions increased in mid-2019 (much lower cost basis than current price).  Was surprised at the timing of Buffett's purchase (felt stock was close to fair value).  Have not added to position, especially after having small positions in Russian-based ADRs suspended last year (Gazprom, MBT, Norislk Nickel).  Also had a number of US and European based stocks that were adversely affected by Russian-based operations (Cummins Engine, Nokian Tires, Veon, Shell, BP, IBM, INTC, Boeing, Airbus...).  The geopolitical risk has always been there with Taiwan.  Now we know how US folks with German investments felt at start of World War II.  

There are very few US companies of any size that would not be affected by actions similar to those taken with Russia last year.  The amount of bi-directional trade between the US and China is huge compared to the amount of trade that existed between the US and Russia.  There are still a large number of companies trying to shut down Russian based operations.  I believe MSFT either just finished, or is in the process of shutting down Russian operations.  MCD and SBUX were relatively quick to shut down, if my memory is correct.  MCD had about 800 Russian locations.  Nokian Tires had Russian heavy duty tire plant(s) for military vehicles and earth movers.  Some firms had their assets taken by Russia, some sold them for $1 to non-profits (sometimes Universities), some were able to sell assets for a fraction of book value.   

edited April 2023

dutchlord

Well-managed company? They require people to work 12 hours a day, 6 days a week and are upset when workers refuse! They prefer to squeeze people for financial gains. This type of companies should be $hitcanned IMHO.