Berkshire Hathaway said it invested more than $4.1 billion of stock in major Apple supplier, chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) , a rare significant foray into the technology sector by billionaire Warren Buffett’s conglomerate.
The news sent shares in TSMC soaring, closing up 7.9% in Taiwan on Tuesday, as it boosted investor sentiment for the world’s largest contract chipmaker, which saw its shares hit a two-year low last month due to a sharp slowdown in global chip demand.
TSMC’s other foreign investors include U.S. asset managers BlackRock Inc and Vanguard Group Inc, and Singapore sovereign wealth fund GIC.
The filing did not specify whether Buffett or his portfolio managers Todd Combs and Ted Weschler made specific purchases and sales. Investors often try to piggy back on what Berkshire buys. Larger investments are normally Buffett’s.
TSMC, which makes chips for the likes of Apple Inc, Qulacomm and Nvidia Corp , posted an 80% jump in quarterly profit last month, but struck a more cautious note than usual on upcoming demand.
Apple is by far the largest investment in Berkshire’s $306.2 billion equity portfolio.
MacDailyNews Take: Currently, TSMC is indispensable and companies that are that essential are generally sound investments.
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I’ve been hoping Apple would make a decent investment in TSMC for some time. I don’t understand Apple’s investment priorities. Some time they make sense. But the ones they don’t do makes no sense.
An example: for several years several smartphone manufacturers have has periscope cameras. Apple is supposedly interested as well. But the (fairly small) company that been supplying them was independent. Apple could have bought them. Did they, no!
So what happened? Samsung bought them. Now, if Apple wants one, they have to buy it from Samsung. Does that make any sense? Of course not.
Alternatively, Apple spends over $20 billion a year on R&D. In the hiring slowdown, they’re still hiring there. So, why can’t they design their own sensors and lenses? I don’t know, but they don’t. They just make minor mods to Sony’s sensors and Sony make them.