After Warren Buffett’s Berkshire Hathaway announced Tuesday that it had acquired a $4.1 billion investment in one of the world’s leading chipmakers, shares of Taiwan Semiconductor Manufacturing Company soared.
On Monday, Berkshire Hathaway (BRKA) disclosed to the U.S. Securities and Exchange Commission that for the three months ending in September, it had purchased around 60 million American depository shares of TSMC (TSM).
TSMC stock rose by more than 8 percent in Taiwan on Tuesday:
TSMC makes about 90% of the world’s most powerful computer chips, which are used by tech giants like Apple (AAPL) and Qualcomm (QCOM).
Tensions between China and the self-governed democratic island of Taiwan have recently increased, and Berkshire has recently purchased a stake in the Taiwanese chip manufacturer.
The increasing military hostility from Beijing toward Taiwan in recent months has highlighted the island’s vital role in the global chipmaking industry.
Since highly advanced semiconductor chips, such as those manufactured by TSMC, are challenging to produce due to the high cost of development and the amount of knowledge necessary, production is concentrated among a few suppliers.
As a result of the company’s significance to Taiwan, the defense ministry has announced that its employees may petition to be spared from military reservist training. The company has been called the “holy mountain” of Taiwan.
President Joe Biden recently imposed wide limitations on the sale of advanced chips and chip-making equipment to Chinese enterprises, adding fuel to the fire of escalating tensions between Washington and Beijing. Many experts are worried that if these rules aren’t changed, they could make the already tense race between the United States and China to make the most advanced weapons even worse.
Apple, Bank of America, Coca-Cola, Chevron, and American Express are just a few of the companies in which Berkshire has significant holdings.
Berkshire Hathaway’s (NYSE: BRK.A) new investments
According to a filing with the SEC made on Monday, Berkshire Hathaway (NYSE: BRK.A), Warren Buffett’s company, has begun making investments in a new group of businesses.
Recently, Berkshire Hathaway has increased its holdings in Jefferies Financial Group (NYSE: JEF), Louisiana-Pacific (NYSE: LPX), and Taiwan Semiconductor Manufacturing (NYSE: TSM) (NYSE: TSM).
The three equities were all up in Monday’s (Nov, 14) extended trading session after the filing was made public. Jefferies gained 4.42%, Taiwan Semiconductor gained 5.88%, and Louisiana-Pacific gained 10.70%.
These three firms are not among Berkshire Hathaway’s most valuable assets, but they do demonstrate Buffett’s intention to diversify Berkshire Hathaway’s holdings to include companies that have been hit hard by the market slump of 2022. All three of the new enterprises are experiencing declines in their first full fiscal years. Berkshire Hathaway’s stock price will rise by 2% in 2022.
The most important thing to remember is that novice investor should model their behavior after Buffett’s by investing in strong value stocks and maintaining a diverse portfolio.