Buffett’s Berkshire Hathaway buys stake in TSMC for $4.1 bn

NEBRASKA: Berkshire Hathaway Inc said it bought more than $4.1 billion of stock in Taiwan Semiconductor Manufacturing Company, a rare significant foray into the technology sector by billionaire Warren Buffett’s conglomerate.

The news sent TSMC shares soaring, closing up 7.9% in Taiwan on Tuesday, as it boosted investor sentiment for the world’s largest contract chipmaker. The shares of the company had hit a two-year low last month because of a sharp slowdown in global chip demand.

In a regulatory filing on Monday describing its US-listed equity investments as of September 30, Berkshire said it owned about 60.1 million American depositary shares of TSMC.

TSMC’s other foreign investors include US asset managers

BlackRock Inc and Vanguard Group Inc, and Singapore sovereign wealth fund GIC.

Berkshire also disclosed new stakes of $297 million in building materials company Louisiana-Pacific Corp and $13 million in Jefferies Financial Group Inc. It exited an investment in Store Capital Corp, a real estate company that agreed in September to be taken private.

The filing did not specify whether Buffett or his portfolio managers Todd Combs and Ted Weschler made specific purchases and sales. Investors often try to piggy back on what Berkshire buys. Larger investments are normally Buffett’s.

Berkshire does not normally make big technology bets, but often prefers companies it perceives to have competitive advantages through their size.

TSMC, which makes chips for the likes of Apple Inc, Qulacomm and Nvidia Corp, posted an 80% jump in quarterly profit last month, but struck a more cautious note than usual on upcoming demand.

“I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares.

“Only a small number of companies that can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” according to Russo.

Berkshire has had mixed success in technology.

Its more than six-year wager during the last decade in IBM Corp did not pan out, but Berkshire is sitting on huge unrealized gains on its $126.5 billion stake in Apple, which Buffett views more as a consumer products company.