TAIPEI (Taiwan News) — Billionaire investor Warren Buffett’s holding company Berkshire Hathaway has slashed its holdings in Taiwan Semiconductor Manufacturing Co. (TSMC) by 86.2% only three months after making a US$4.1 billion (US$124 billion) investment in the company.
Following the announcement, shares in TSMC fell 6% on Wednesday (Feb. 15), though overall they remain up about 23% for the year. Hathaway’s share dump follows Tiger Global Management, GQG Partners and Capital Group, BlackRock Inc, as well as JPMorgan & Chase all making significant reductions in their TSMC holdings, according to reports.
The 2023 export outlook for Taiwan may have contributed to the selloff. Weak U.S. and Chinese demand for Taiwan’s exports, and low consumer confidence are all expected to impact the Taiwan’s economic performance over the remainder of 2023.
The move has taken some investors by surprise, as Buffett is famously a “long term” investor, though one Taiwanese economist said the move has been misunderstood. Director of President Capital Management (統一投顧) Li Fang-kuo (黎方國) said that although it is widely believed that Buffett is a long-term investor, more than one third of his holdings will be sold off every quarter or two.
Despite TSMC’s own prediction that sales will drop this quarter, it is continuing with construction of multiple fabs in the U.S. and Japan, while it also increased investment to US$40 billion for its Arizona operations in December, with a further US$3.5 billion capital injection approved by the TSMC board on Tuesday (Feb. 14).
TSMC is planning to have the first Phoenix facility (4nm) ready for commercial production in 2024, while it has also begun construction of a second 3nm fab which is slated to be finished in 2026.
Buffett’s mass withdrawal and the 2023 economic outlook aside, long term growth prospects for TSMC and the global semiconductor industry remain healthy, with some predicting an over 12% increase in the market by 2029. In the medium term, an increase in economic activity in China, a reduction in global inflation levels, and increased consumer confidence in key markets are likely to have a positive impact.