Sales in Taiwan Semiconductor skyrocketed after Warren Buffett’s Berkshire Hathaway bought a $5-billion stake in the company—a rare move for the legendary investor.
- Tech stocks are not typically Buffett’s preferable investments as he says he doesn’t like to invest in businesses he doesn’t understand.
- Sales of Taiwan Semiconductor Manufacturing Company (TSMC) surged following the investment made through Buffett’s Berkshire Hathaway.
- TSMC is the exclusive supplier of semiconductor chips for Apple—Buffett’s most valuable single holding in the Berkshire portfolio.
Why it’s news
Tech investments are rare for Buffett and the move signals that the investor must think TSMC has bottomed out after a $250-billion selloff.
The company disclosed that it acquired around 60 million American depository receipts in the chip company over three months ending in September. Judging by the trading value at the time, the buy cost Buffett around $5.1 billion, Fortune reports.
The current trading value of TSMC’s shares is around $72.80 and the company’s shares rose nearly 9.4% in Taiwan following the disclosure—marking the largest increase in a single day in two years.
Buffett’s aversion to tech investment has been waning in more recent years as he has gradually increased his investment in the tech industry.
Chipmaking businesses are likely to remain for years to come as their product is an integral part of everyday objects ranging from refrigerators and microwaves to automobiles.
As tech giants like Amazon expand their cloud services, chip demand will likely increase to meet the need for more data centers.
TSMC is on the cutting edge of advanced chip manufacturing—making it an important player while China dn the U.S. race to be a global technology leader.
Before Buffett’s investment, shares in the chip company were dropping as demand for chips decreased.