Bloomberg News reports that Warren Buffet’s Berkshire Hathaway Inc has taken a stake of approximately $5 billion in the Taiwan Semiconductor Manufacturing Co. This is a sign that the legendary and veteran investor believes that the leading chipmaker of the world has bottomed out following a $250 billion selloff. After that, there was a surge in the shares.
The conglomerate that is based in Omaha was found to be acquiring around 60 million American depository receipts in the Taiwan Semiconductor Manufacturing Co in the three months that ended in September, as stated in a filing.
TSMC – What does it do?
The Taiwanese firm produces semiconductors for well-known clients, including Qualcomm Inc, and Nvidia Corp. Apple Inc’s custom silicon chips are exclusively supplied by the company. However, Apple remains the single most valuable holding in Berkshire’s portfolio.
Assuming that TSMC’s ADR was bought by Buffet at an average price for the third quarter, in that case, Buffet would have had to shell out $5.1 billion. The current trading figure is $72.80. Shares of TSMC surged by as much as 9.4% in Taiwan following the disclosure, and this is the biggest intraday surge witnessed in the last two years.
Bloomberg News reports that the 92-year-old veteran investor has stayed away from investing in the tech industry for a long time, hinting and giving the impression that he did not believe in investing in those industries that he failed to understand. However, given the trend, people have been wronged about this impression as he has also invested a considerable proportion in the tech sector over the last few years.
A Sector of Sustained Growth
Chipmaking is a segment that has always promised sustained growth over the years, and this is because it is essential in the growth of related industries like electric cars, self-driving vehicles, and artificial intelligence, aside from various connected home applications. Growth and expansion in the cloud services that include the likes of Amazon.com Inc’s AWS are also promising in bringing in bulk orders for silicon that goes into the large expanse of data centers.
The Taiwan Semiconductor Manufacturing Co has taken over from Intel Corp. as the company advances in the cutting edge of chipmaking. It is also emerging as a crucial and strategically vital player during a period when China and United States are clashing over leadership in the technology sector worldwide.
Shares of TSMC had earlier slid by 28% in Taiwan in the current year through the close of Monday. This is because the demand for chips has slumped with the economic meltdown, and investors fret about oversupply.
In October, the company revealed that it had pulled back on the areas of capital spending to approximately $36 billion in the current year, which still would be at a record high and one which is down from approximately $40 billion, which was previously planned.
