Berkshire Hathaway announced the acquisition of a $4.1 billion stake in Taiwan Semiconductor Manufacturing (TSMC), marking one of the conglomerate’s first major steps into the chip industry.
The announcement lifted investor optimism for TSMC, which saw its shares hit a two-year low last month due to a significant chip demand downturn. Although Berkshire rarely makes large technological bets, it favours any firms it believes to have a competitive edge.
In a regulatory filing, Berkshire stated that it owns about 60.1 million shares of TSMC as of September 30. Other overseas investors in TSMC include US asset managers BlackRock Inc and Vanguard Group, as well as Singapore sovereign wealth fund GIC.
A rare move for Berkshire
Berkshire also revealed new holdings of $297 million in building materials company Louisiana-Pacific and $13 million in Jefferies Financial Group. Furthermore, the organization disclosed an exit from an investment in Store Capital, a real estate company that agreed to be taken private back in September.
According to the document, several of the acquisitions and sales were led by Berkshire CEO Warren Buffet and his asset managers, Todd Combs and Ted Weschler. Investors frequently try to capitalize on Berkshire’s purchases. Buffett often leads larger investments.
Berkshire has confidence in TSMC
TSMC, which manufactures processors for companies like Apple, Qualcomm, and Nvidia, reported an 80 percent increase in quarterly earnings last month. Despite the solid results, the organization is cautious due to a downturn in chip demand.
Berkshire has had mixed results in the technology sector, but the investment was made nonetheless. Tom Russo, a partner at one of Berkshire’s shareholders, said he thinks Berkshire believes the world can’t do without TSMC’s products. He added that only a few businesses have the resources to supply semiconductors, which are increasingly important in people’s lives.