Warren Buffett’s investment powerhouse Berkshire Hathaway sold its remaining shares in TSMC, the largest supplier to Apple (AAPL), in the first three months of 2023, according to an SEC filing yesterday (May 15). The transaction completes Buffett’s exit from the Taiwan-based chip giant after months of slashing holdings.
Berkshire is a major investor in Apple, holding more than $150 billion worth of Apple shares. TSMC supplies chips, parts and the assembly for all Apple products. Last year, Berkshire invested in TSMC for the first time with the purchase of a $4.1 billion stake between July and September 2022.
However, just months later, the firm sold 86 percent of its TSMC shares (likely at a loss), Berkshire revealed in February. The quick sale surprised market observers because Buffett is known for making long-term investments, often holding large positions like this for many years.
In an interview with CNBC in April, Buffett said TSMC is a “fabulous enterprise” but the escalating geopolitical tension between its home base Taiwan and mainland China concerned him.
“I don’t like its location, and I’ve re-evaluated that,” Buffett said during Berkshire Hathaway’s annual shareholders meeting on May 6. “I feel better about the capital that we’ve got deployed in Japan than in Taiwan. I wish it weren’t sold, but I think that’s a reality.”
The Chinese government claims Taiwan as its own, a claim Taiwan rejects. Tensions between Beijing and the democratically governed island have been growing in recent months, fueling speculations that war may soon break out between the two regions.
To quell investor concerns, TSCM has pledged to move some of its business to the U.S. In December 2022, the company announced it will triple its planned investment in the U.S. to $40 billion to manufacture advanced computer chips in the country. But TSMC’s core operations are still concentrated in Taiwan and mainland China, where it runs multiple plants, including the world’s largest iPhone factory in central China.
Buffett acknowledged TSMC is a clear leader in chip manufacturing. “There’s no one in the chip industry that’s in their league, at least in my view,” he said at Berkshire’s shareholder meeting. “Marvelous people and marvelous competitive position and everything, [but] I’d rather find it in the United States.”
In the first quarter, Berkshire also made several notable adjustments to its banking portfolio. The firm sold shares in custodian bank Bank of New York Mellon, Jefferies Financial Group and US Bancorp, a regional bank in Minneapolis, according to yesterday’s filing. During the same period, Berkshire raised its bets in Bank of America and Capital One.
Buffett increased his holding in Bank of America by 2 percent and Capital One (added $954 million) and didn’t touch its stake in Citigroup.