In an unusual move into the technology sector, Warren Buffett’s Berkshire Hathaway Inc. purchased more than $4.1 billion of stock in Taiwan Semiconductor Manufacturing Company Limited (TSMC), the conglomerate said.
TSMC is the world’s largest contract chipmaker. Its stock fell to a two-year low in October as global demand for chips slowed, but with the announcement in mid-November, shares jumped 7.9%.
Berkshire said that it owned 60.1 million American depository shares of TSMC, according to a September 30 regulatory filing, Reuters reported. The chipmaker’s other investors include U.S. asset managers BlackRock Inc. and Vanguard Group Inc., and Singapore’s sovereign wealth fund GIC.
Berkshire, though it typically does not invest in tech companies, often prefers businesses it thinks have competitive advantages, such as size — a quality TSMC certainly has.
TSMC makes chips for Apple, Qulacomm, and Nvidia Corp.
"I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi," Tom Russo, a Partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares, told Reuters. "Only a small number of companies . . . can amass the capital to deliver semiconductors, which are increasingly central to people's lives."
Apple is the largest investment in Berkshire’s $306.2 billion equity portfolio, with a $126.5 billion stake. But Buffett views this as more of a consumer product company than a tech firm, according to Reuters.
The TSMC purchase was disclosed two and a half months after Berkshire began reducing its multi-billion dollar stake in China’s largest electric car company, BYD Co.
Buffett, who is 92, has run Berkshire since 1965.