Warren Buffett Cites Geopolitical Tensions as Reason for Sudden Sale of TSMC Stake

Billionaire investor Warren Buffett has revealed that Berkshire Hathaway’s decision to sell its stake in Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSC) was partly influenced by geopolitical considerations.

In an interview with Nikkei, Buffett stated that the ongoing geopolitical tensions between the US and China had played a role in Berkshire Hathaway’s decision to divest its stake in TSMC, which is a major supplier of semiconductors to various companies around the world. Buffett emphasized that Berkshire Hathaway remains positive about TSMC as a company, acknowledging it had been a successful investment for his portfolio.

Buffett further explained that Berkshire Hathaway’s investment decisions are influenced by geopolitical factors, and their potential impact on its portfolio companies is taken into “consideration.” Berkshire Hathaway bought a $4.1 billion stake in TSMC during the third and fourth quarters of 2022, but ended up selling about 86% of the shares by the end of the year. He added that he has better places to invest the fund’s money despite TSMC being a well-managed business.

Berkshire Hathaway’s sudden sale of TSMC was unexpected, as the billionaire investor tends to make long-term bets. According to Reuters, the size of the stake suggests Buffet himself orchestrated the purchase, rather than his portfolio managers.

Taiwan considers TSMC one of its most prized companies, as it manufacturers some of the most advanced chips in the world, used across a variety of electronics, including by Apple and Qualcomm. China also perceives TSMC as a valuable company, and repeatedly claims that Taiwan is its territory even though its never been under Beijing’s control.

Information for this briefing was found via Asia Nikkei and Reuters. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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