The investment vehicle led by Warren Buffett and Charlie Munger, Berkshire Hathaway (BRKA.US) has come out with a stake of 60 million shares in the world's largest Taiwanese semiconductor manufacturer, Taiwan Semiconductors (TSMC). The package is valued at nearly $4.1 billion. Also gaining on the wave are the shares of other chipmakers including AMD (AMD.US), Intel (INTC.US) and Nvidia (NVDA.US), which have been under pressure this year:
- According to documents from the SEC, the fund purchased shares over a three-month period, from June to September this year. Interestingly, the purchases took place amid record tensions between China and Taiwan, which can count on US support. With this in mind, Berkshire likely assumes Chinese military intervention as less likely, and found TSMC's valuation attractive enough to take an interest in the stock despite rising geopolitical risks;
A list of the portfolio of Berkshire Hathaway's largest fund holdings. This year, the company acquired massive stakes in Occidental Petroleum, Chevron and TSMC. Source: BerkshireHathaway, Financial Times
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Open account Try demo Download mobile app Download mobile app- Berkshire's disclosure among the largest shareholders of the world's largest chipmaker takes some of the stress off the semiconductor industry's recent run-up amid U.S. sanctions on China, the world's largest semiconductor importer, declining device demand and the risk of Chinese intervention on the island;
- TSMC is responsible for producing nearly 90% of the world's most advanced computer chips, supplying technology giants including Apple (AAPL.US) and Qualcomm (QCOMUS). A company spokesperson commented on the reports: "TSMC welcomes all investors with an inclination to buy and hold TSMC shares."
- The production of advanced semiconductor chips and the precision industry and supply chains centered around it make Taiwan Semiconductors' role in the new technology market almost irreplaceable. The chip industry requires huge development expenditures by making production concentrated among just a few suppliers. With this in mind, the company seems to meet Buffett's condition of a so-called 'wide moat' signaling market resilience (product dominance) and competitive advantage;
- Tensions between Washington and Beijing recently eased when the two leaders engaged in dialogue and sat down for talks at the G20 summit, on the island of Bali in Indonesia. Although a breakthrough in relations did not occur, global markets took the bilateral meeting as a signal of a 'drop in record tensions' between Washington and Beijing. The two countries are likely to face an inevitable technology rivalry.
Taiwan Semiconductors (TSM.US) shares, H4 interval. The share price has approached the 200-session average, which has so far marked a key resistance level. RSI is indicating near overbought levels, near 72 points. The news of Buffett's stock purchase appeared to be a catalyst for euphoria and hit 'good ground' as Chinese stocks also recorded a great session today, signaling an increase in risk appetite despite Xi Jinping's third 'threatening-looking' term. Source: xStation5
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