Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) closed sharply higher yesterday on reports that Berkshire Hathaway Inc had taken a stake in the world’s largest contract chipmaker.
In a filing with the US Securities and Exchange Commission on Monday, billionaire investor Warren Buffett’s company said it had bought US$4.1 billion of TSMC’s American depositary receipts (ADRs) by the end of September.
The Omaha-based conglomerate acquired about 60 million ADRs in TSMC last quarter, a sign the legendary investor thinks the world’s leading chipmaker has bottomed out after a sell-off of more than US$250 billion.
Photo: Ann Wang, Reuters
That sent TSMC shares shooting up 7.87 percent to close at a two-month high of NT$480.
TSMC produces semiconductors for clients like Nvidia Corp and Qualcomm Inc, and is the exclusive supplier of Apple Inc’s custom silicon chips. Apple remains the most valuable single holding in Berkshire’s portfolio.
The 92-year-old Buffett long shied away from the tech industry, making the case that he did not want to invest in businesses that he did not fully understand. However, that stance changed in recent years, and he has dedicated an increasing proportion of his firm’s investments to the tech sector.
Chipmaking is one segment that promises sustained growth over the coming years as it is essential to the expansion of nascent industries such as self-driving and electric vehicles, artificial intelligence and connected home applications. Expansion of cloud services providers like Amazon.com Inc’s AWS also promises to bring in more orders for chips that go into vast data centers.
TSMC’s gains contributed almost 300 points alone to the TAIEX’s rise, which closed up 371.41 points, or 2.62 percent, at 14,546.31, Taiwan Stock Exchange data showed.
“Many investors here simply followed Buffett in picking up TSMC shares on Tuesday because they are impressed by the American investment guru’s vision and strategies,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“Investors see Buffett as someone who holds stocks for the long term, and the large buy of TSMC shares showed his faith in the chipmaker’s long-term outlook by ignoring short-term market uncertainty,” Huang added.
Berkshire also took a position in Jefferies Financial Group Inc even as it trimmed its stake in financial stocks, including US Bancorp and Bank of New York Mellon Corp, its quarterly filing showed.
New York-based Jefferies was one of three new bets unveiled by Berkshire, in addition to TSMC and construction materials manufacturer Louisiana-Pacific Corp.
Berkshire was a net buyer of equities in the quarter, with US$3.7 billion of purchases after sales. The company trimmed its exposure to financial stocks by about US$4.7 billion in the period.
Additional reporting by Bloomberg
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