Chips, Warren Buffett’s new massive investment

Warren Buffett is increasingly respected by retail investors. As if that were not enough, with his long-term strategy which has enabled him to obtain very regular stock market returns, the 92-year-old businessman is one of the few in the ranking of the biggest fortunes not to not having seen his wealth evaporate in recent months. In comparison, over a year, his fortune has even increased. From 104 billion dollars it rose to 109 billion dollars. On the side of Mark Zuckerberg, his 122 billion dollars last year have been reduced to less than 44 billion this year.

The setbacks in crypto-currencies, with the express bankruptcy of FTX, refocused a large number of investors towards the Warren Buffett method and state of mind. He who, at the end of the spring, strongly criticized virtual currencies and trading, follows a line of conduct that is all the more oriented towards companies with solid balance sheets… not always very green. There has recently been, with the war in Ukraine and the rise in the price of oil and gas, a colossal investment in Occidental Petroleum. He owns 15% of the shares, for a total amount of 20 billion dollars.

From black gold to electronic gold

Thanks to the publication of his new documents for the transparency of his activity with Berkshire Hathaway, Warren Buffett revealed that he had invested during the third quarter in a new company, just as strategic as Occidental Petroleum in 2022. The total amount of the investment amounts to 4.1 billion dollars. It is a not so distant cousin to Apple: TSMC. The iPhone chipmaker, which also sells to AMD, ARM, MediaTek and Nvidia, has a gigantic, if not indispensable, place in tech for most products equipped with a semiconductor.

TSMC weighs for a little more than 12 billion dollars on the stock market. It’s hard to know when the billionaire turned to the Taiwanese manufacturer, but it seems he was perfectly successful in buying back in the bottom of the wave, when the action was at its lowest since July 2020. Meanwhile, the chipmaker has had two peaks, the last of which was in January 2022. Since then, the stock has fallen 43%. It is now suspected that if Warren Buffett bought back at the lowest point in TSMC stock in the last three months (October 25, 2022), his investment would have already brought him a rise of almost 30%.

TSMC: economic and political power

After gas and oil, Warren Buffett via his conglomerate Berkshire Hathaway has just invested in the gold of the 21st century: semiconductors. Plagued by shortages, these more than essential components are in the hands of TSMC, which alone holds 53% of the world market. 90% of its foundries are in Taiwan, the scene of tensions between the United States and China. The island is now autonomous for a large part of foreign countries, but China considers it a secessionist province which will eventually become an integral part of the country.

At TSMC, we showed our fangs in August, when the Speaker of the United States House of Representatives landed on the island for a diplomatic visit. “No one can control TSMC by force because it is a sophisticated manufacturing facility that depends on real-time connection to the outside world”said Mark Liu, the boss of the global chip giant. “Because our disruption would create a big economic turmoil in China – all of a sudden their supply of the most advanced components disappears. It’s an interruption I have to say, so people will think twice about it”he added.