Warren Buffet’s Berkshire Hathaway Sharply Reduces Its Holding In Chip Giant TSMC By 86.2% Even As It Expands Its Equity Ownership In Apple

Shares of TSMC (Taiwan Semiconductor Manufacturing Company Limited) fell by over 3% today (Feb 15) after a filing by Warren Buffet’s Berkshire Hathaway revealed that it has sharply reduced its holding in the chip major.

Berkshire Hathaway reduced its stake in TSMC by a whopping 86%, dropping from 60 million shares to 8.29 million shares valued at $617.7 million.

Even as it slashed its holding in TSMC, Berkshire Hathaway expanded further on its Apple holding. The investment behemoth revealed that it expanded its stake in Apple by over $3 billion during the fourth quarter of 2022.

Apple continues to be Berkshire Hathaways single largest equity investment owning 5.8 per cent of the total shares of the Cupertino-based tech giant. Berkshire Hathaway’s stake in Apple is now worth over $137 billion.

Apple is the largest customer of TSMC, accounting for over 25% of its revenue.

As the world’s largest and most sophisticated contract chipmaker, TSMC produces the smallest, densest, and most power-efficient chips for fabless chipmakers like Advanced Micro Devices, Qualcomm, Nvidia, and Apple. The company’s dominant position in 7nm and 5nm nodes gives its pricing power currently unmatched by rivals Samsung and Intel.

TSMC is Apple’s exclusive provider of the most advanced chips inside every iPhone on the market and most Mac computers.

In January, TSMC said it would scale down capital expenditure by as much as 10 per cent in 2023 as inventory corrections are expected to extend into the first half of this year amid sagging chip demand for data centres, PCs and smartphones. The chipmaker also said that its revenue in the first quarter is likely to dip 5 per cent as it weathers a global downturn in the chip industry because of softening consumer demand for electronics.

In November last year, Berkshire Hathaway disclosed that it had purchased more than $4.4 billion of stock in TSMC (Taiwan Semiconductor Manufacturing Company Limited), the world’s largest contract chip manufacturer that pioneered the pure-play foundry business model.

The investment in TSMC was significant, considering Buffet usually avoids foraying into the technology sector.

When asked once why he didn’t invest in technology stocks, Buffett famously quipped that he didn’t invest in companies he didn’t understand. Buffet has since admitted shunning the technology sector might have been a mistake and has taken significant positions in tech behemoths, including Amazon and Apple.

Buffett-founded firms own scores of businesses, including See’s Candies, Geico, and the BNSF Railway. It also holds multibillion-dollar stakes in public companies such as American Express, Coca-Cola, and Kraft Heinz.