Berkshire Buys TSMC for $4.1 Billion in Rare Foray Into Tech Sector

Berkshire Hathaway said it has bought more than $4.1 billion (about Rs. 33,212 crore) of stock in Taiwan Semiconductor Manufacturing, a rare foray into the technology sector by billionaire Warren Buffett’s conglomerate.

The news sent TSMC shares soaring, closing up 7.9 percent in Taiwan on Tuesday, as it boosted investor sentiment in the world’s largest contract vendor, which saw its shares hit a two-year low last month due to a sharp drop in global chip demand. . .

In a Monday regulatory filing detailing its US-listed equity investments as of Sept. 30, Berkshire said it has about 60.1 million US shares in TSMC.

TSMC’s other foreign investors include US asset managers BlackRock and Vanguard Group, and Singapore sovereign wealth fund GIC.

Berkshire also disclosed new valuations of $297 million (approx. Rs. 2,405 crore) in construction materials company Louisiana-Pacific and $13 million (approx. Rs. 105 crore) in Jefferies Financial Group. It came out of an investment in Store Capital, a real estate company that agreed in September to be taken private.

The filing did not specify whether Buffett or his portfolio managers Todd Combs and Ted Weschler bought and sold anything. Investors often try to get back on what Berkshire buys. The biggest investments are usually Buffett’s.

Although Berkshire rarely makes big tech bets, it tends to pick companies it sees as having competitive advantages, usually through their size.

TSMC, which makes chips for the likes of Apple, Qulacomm and Nvidia, posted an 80 percent jump in quarterly profit last month, but sounded more cautious than usual about future demand.

“I suspect that Berkshire believes that the world cannot do without products produced by Taiwan Semi,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares.

“Only a few companies can raise the capital to deliver semiconductors, which continue to be the backbone of people’s lives,” he added.

Berkshire has had mixed success in technology.

Its more than six-year wager over the past decade on IBM hasn’t panned out, but Berkshire is sitting on a huge unrealized profit on its $126.5 billion (roughly Rs. 10,24,553 crore) stake in Apple, which Buffett considers a major buyer. A product company.

Apple is the largest investment in Berkshire’s $306.2 billion (approx. Rs. 24,80,264 crore) equity portfolio.

Berkshire disclosed the TSMC stake about 2-1/2 months after it began reducing its stake in the decade-old, multi-billion dollar stake in BYD, China’s largest electric car company.

In the third quarter, Berkshire added to its stakes in Chevron, Occidental Petroleum, Celanese, Paramount Global and RH.

It also sold shares of Activision Blizzard, Bank of New York Mellon, General Motors, Kroger and US Ban.

Buffett, 92, has been with Berkshire since 1965. The Omaha, Nebraska company also owns many businesses such as BNSF railroad, Geico auto insurance, several energy and industrial companies, Fruit of the Loom and Dairy Queen.

© Thomson Reuters 2022

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