New Delhi: As part of a rare and large push into the technology industry, conglomerate owned by billionaire Warren Buffett, Berkshire Hathaway Inc. announced that it has purchased more than $4.1 billion in stock in Taiwan Semiconductor Manufacturing.
The news bolstered investor optimism for the world’s largest contract chipmaker, whose shares last month fell to a two-year low as a result of a significant slowdown in global chip demand. Shares of TSMC surged, finishing up 7.9% in Taiwan on Tuesday.
In a regulatory filing on Monday, Berkshire stated that as of September 30, it owned around 60.1 million American depositary shares of TSMC.
American asset managers BlackRock Inc. and Vanguard Group Inc., as well as the GIC sovereign wealth fund of Singapore, are among the other foreign investors in TSMC.
Additionally, Berkshire revealed new investments in Louisiana-Pacific Corp, a manufacturer of building materials, and Jefferies Financial Group Inc. for $13 million. It sold its stock in Store Capital Corp., a real estate firm that had previously planned to go private in September.
Buffett or his portfolio managers Todd Combs and Ted Weschler may or may not have made specific acquisitions and sells, according to the document. Investors frequently try to profit from the purchases Berkshire makes. Typically, Buffett’s investments are larger ones.
Although Berkshire often avoids placing significant bets in technology, it frequently favours businesses it believes to have a competitive edge, frequently due to their size.
The chip manufacturer TSMC, which supplies processors to companies like Apple Inc., Qualcomm, and Nvidia Corp., reported an 80% increase in quarterly earnings last month, although it was less optimistic than normal about future demand.
“I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares.
“Only a small number of companies that can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” he added.
However, Berkshire is sitting on enormous unrealized gains on its $126.5 billion holding in Apple, which Buffett considers more as a consumer products firm. This is in contrast to its more than six-year wager made by Berkshire during the last ten years in IBM Corp.
The $306.2 billion equities portfolio owned by Berkshire has Apple as its single largest holding.
About two and a half months after starting to reduce a multi-billion dollar position in BYD Co, the largest electric car manufacturer in China, Berkshire disclosed its ownership of TSMC.
Berkshire increased its holdings in Chevron Corp, Occidental Petroleum Corp, Celanese Corp, Paramount Global, and RH during the third quarter.