Berkshire Hathaway unexpectedly made a big bet on TSMC’s stake!
Taiwan Semiconductor Manufacturing Co.(TSMC)’s stake of approximately $4.1 billion was acquired by Warren Buffet, the Chairperson of Berkshire Hathaway, indicating that the renowned investor believes the global chipmaker has bottomed out after selling more than $250 billion in assets.
This news is a bit surprising because Berkshire Doesn’t have any history of taking chipmaker’s stakes. Additionally, the sector as a whole has been reporting relatively low demand from manufacturers of electronic devices.
TSMC (TSM) depository shares were acquired by Berkshire Hathaway in the three months ending September, according to a document made with the US Securities and Exchange Commission.
After Berkshire’s acquisition was announced last week TSMC’s shares have increased up to 10%.
The investors are confused because of Warren’s sudden bet and wonder why he invested in TSMC, a sector in which the demands are decreasing.
If we look into why Warren Buffet invested in TSMC, what we get to know is that as an investor Warren has a very long view. He is in the investment sector for years and he frequently bets more money on cyclical businesses even when their business cycle is in a more depressing state.
Currently, the demand for electronic devices is comparatively weak, which is causing the semiconductor sector as a whole to slow down. For instance, the first 20 days of November saw semiconductor sales in South Korea decline by 29.4% year-over-year.
TSMC’s semiconductor manufacturing plants offer benefits that keep them in demand even though the semiconductor industry as a whole may be feeling under the weather. It is one of the few firms that are capable of manufacturing chips with just a 7-nanometer or 5-nanometer width.
While the industry as a whole is declining, TSMC announced third-quarter sales that increased by 15% from the prior quarter and 48% year over year.
Buffet has long avoided the tech sector, claiming that he didn’t want to invest in a sector of the business that he didn’t completely understand. However, his position has now evolved, and now he invests a larger percentage of his company’s funds in the tech industry.
One industry that is expected to experience sustainable growth over the future years is chip manufacturing, which is necessary for the growth of emerging sectors including connected home applications, self-driving, electric cars, and artificial intelligence.
TSMC reported third-quarter net income that shot up by 80% year over year despite the difficult environment facing the semiconductor industry as a whole. Although the company appears to be in a strong lead in the lucrative market for small chips, there are no guarantees that it will continue to dominate the competition.
The news regarding Warren Buffet’s investment in the tech industry helped investors and manufacturing firms to get up from the downfall that they have been through.
Warren Buffet, the CEO of Berkshire Hathaway, who is also known as the “Oracle of Omaha” is widely considered the most successful investor of the 20th century. Being one of the most successful investors and one of the wealthiest men in the world, Buffet has achieved so many awards and recognitions.
Taiwan Semiconductor Manufacturing Corporation or TSMC is about to be the world’s most advanced chipmaker because of its uniqueness and hard work. TSMC is considered the world’s most valuable company which manufactures semiconductors. Founded in 1987, the industry has faced so many ups and downs.
According to the media reports, TSMC is going to have its best year because Berkshire Hathaway has taken a stake of about $4.1 billion.
TSMC produces super-advanced semiconductor chips which are difficult to make because of the high cost of making and the level of knowledge that one requires while making this.
Berkshire Hathaway, a multinational conglomerate company owned by Warren Buffet also has large shares in Apple, Bank of America, American Express, Chevron, and Coca-Cola.
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