Investment behemoth Warren Buffett of Berkshire Hathaway revealed in an interview with CNBC Japan that his firm's startling decision to slash its multi billion dollar stake in the Taiwan Semiconductor Manufacturing Company (TSMC) that caught many by surprise earlier this month came from him. Mr.Buffett's investment firm surprised the investment world in late 2022 as it bought a massive $4.1 billion stake in TSMC during 2022's third quarter, making it the firm's largest investor. However, a quarter later, Berkshire sold most of its holdings, in a surprising move from the firm, which prides itself on taking a long approach to investing, buying, and holding shares for decades.
Warren Buffett Confirms Buying and Selling TSMC Shares Was His Own Decision
Berkshire's filings with the Securities and Exchange Commission (SEC) revealed in February 2023 that the firm had reduced its investment in TSMC by 86% during Q4 2022. Immediately after the filing, speculation started behind the rationale of the firm's decision as some believed that a Buffett manager had sold the shares. In contrast, others outlined that the geopolitical risk surrounding TSMC had caused Berkshire to pull out.
TSMC is the world's largest contract chip manufacturer, but all of its high end chip production plants are in Taiwan. This creates concern among both investors and TSMC's customers about the security of these facilities due to Taiwan's proximity to China and the tensions between the two.
As part of his spending spree in Japan, where Mr. Buffett has bought five Japanese trading houses, the billionaire investor also confirmed that he was the one who had decided to sell TSMC shares. He outlined the thought process in an interview with CNBC's Becky Quick and added that TSMC is a great company, but its location in Taiwan leaves crucial factors out of its control. Others, such as Intel chief Mr. Patrick Gelsinger, have also raised concerns about the potential conflict between Taiwan and China and its impact on the global semiconductor supply chain.
The investor's comments came as TSMC's revenue for March 2023 dropped to its lowest point since October 2021. However, it maintained a broader uptrend that has seen the firm massively grow its sales as the personal computing and technology markets expand and chips are used in products ranging from cars to smartphones.
After TSMC's revenue release, investment and research firms weighed in on the result. Morgan Stanley had warned before the release that TSMC faces another tough quarter in Q2, which might lead the firm to cut its revenue estimates for 2023. JPMorgan added to this post release, sharing that an order cutdown was behind the Taiwanese chipmaker's woes. It reiterated Morgan Stanley's prediction that revenue would also continue to drop during the current quarter. JPMorgan also believes that while 2023 will be a challenging year for TSMC, the firm will grow in 2024 as economies recover from inflation and other constraints.
Wedbush was surprised by the extent of TSMC's revenue drop in March, as it shared that not only was the slowdown significant but surprising since revenue figures rarely diverge from TSMC's guidance as the firm has adequate visibility into its product output and shipments. Over the long term, Wedbush belives that TSMC will benefit from the growth in artificial intelligence and electric vehicles - both of which are also on the mind of TSMC CEO Dr. C.C. Wei.
Refference- https://wccftech.com
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