Cross-straits Conflict May Have Spooked Warren Buffett to Liquidate His $4 Billion Stake in TSMC: Report

[btarunr]

Ace investor Warren Buffett held a US $4 billion stake in TSMC as of January, and has reportedly sold all of it over a period between February to April, 2023. The sale has triggered alarm bells in some circles over the possible reasons someone like Buffett—who wrote the book on long-term strategic investments—would liquidate their holdings. The ongoing slump in the semiconductor industry, and economic recession in the West, seem to cut it as valid reasons. Fortune Magazine has a more grim theory.

Fortune writes that the possibility of a cross-straits conflict between Taiwan and China is at an all-time high, and this could have been a consideration for Buffett to sell his TSMC stake. It is assessed that a Chinese invasion of Taiwan now—with global chip supply chains not yet having attained "resilience"—would minimize economic reprisals on China from the West. The other side of the story could be that the economic slump, in combination with semiconductor manufacturing facing its biggest technological challenges as it approaches the 20-angstrom realm, may have soured TSMC's long-term prospects for Buffett.



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[kondamin]

Or he has an other idea to put the capital he is managing, which will make him a more money faster.
There is a liquidity crisis lots of people need money and banks aren’t lending.

 

[sLowEnd]

Or he has an other idea to put the capital he is managing, which will make him a more money faster.
There is a liquidity crisis lots of people need money and banks aren’t lending.

At his age, I wonder if it's really even about the money anymore? lol
He probably just really likes his job to continue doing it.

 

[Daven]

“in combination with semiconductor manufacturing facing its biggest technological challenges as it approaches the 20-angstrom realm”

Its not like they hit the shrink wall and just stop. TSMC will continue to make chips until the entire world is using silicon on the last node. That will take some time.

 

[kondamin]

At his age, I wonder if it's really even about the money anymore? lol
He probably just really likes his job to continue doing it.

Its not just his money it’s his companies money.

 

[64K]

At his age, I wonder if it's really even about the money anymore? lol
He probably just really likes his job to continue doing it.

Yeah, the guy is 92 years old with a net worth of 113 billion dollars. He has said that he is a contrarian. He buys when other investors are panicking and racing to sell and he sells when other investors are too confident of value in investments.

Its not just his money it’s his companies money.

I believe it was his own money invested in TSMC. The company that he is CEO of (Berkshire Hathaway) has a Market Cap of 708 billion dollars and revenue of 302 billion dollars.

 

[watzupken]

I don't see any reason to buy TSMC or any fab when they are gradually being restricted to whom they can do business with. For instance, US dictates that the fabs cannot freely so business with China, or any nations on their cross hair. So with limited upside, and a big downside, I don't see why you would like to invest in such companies. Given very gloomy economic outlook, these restrictions will squeeze the profits of these companies hard.

 

[hs4]

At his age, I wonder if it's really even about the money anymore? lol
He probably just really likes his job to continue doing it.

Gambling addicts are not cured for life.

 

[evernessince]

I don't see any reason to buy TSMC or any fab when they are gradually being restricted to whom they can do business with. For instance, US dictates that the fabs cannot freely so business with China, or any nations on their cross hair. So with limited upside, and a big downside, I don't see why you would like to invest in such companies. Given very gloomy economic outlook, these restrictions will squeeze the profits of these companies hard.

China is being restricted because it's threatening war with Taiwan and other countries are fed up with having their IP stolen. The only other sanctioned country is Russia for obvious reasons. Not sure what your argument here is other than that you either think nothing should restrict capitalism or that China and Russia should not be punished for their actions.

 

[lexluthermiester]

Or he has an other idea to put the capital he is managing, which will make him a more money faster.
There is a liquidity crisis lots of people need money and banks aren’t lending.

This or he thinks the threat of China invading Taiwan is credible. That would spook anyone. What Buffet fails to understand is that Taiwan is a close and very nearly critical economic partner to the US and most of the western world. If China attacks Taiwan, they will get pummeled. The problem is, they have viable nukes and we don't know how willing they are to use them. What needs to happen is the Chinese leadership being removed and a sensible government taking power. Otherwise we are headed into World War 3. China wants Taiwan and we can't let them have their way. We're at an impasse an the only way out is for China to yield or have their moron leadership removed.

(Note to mods: This was not intended to be a political statement, only an opinion based on a conclusion of available facts.)

 

[the54thvoid]

This is tenuous tech news at best. It's investor news. Might as well get info on who has major shares in Intel, AMD, or Nvidia. Never seen an article on that.

 

[mb194dc]

Just move tsmc brick by brick to US soil and give all the employees green cards. Problem solved ?

 

[Luminescent]

While the commoner can make a guess, the 92 years old billionaire has access to information right from the people who run the country, probably someone came to him and said, SIR, SIRRRRR, CAN YOU HEAR ME ? A WAR MIGHT HAPPEN IN TAIWAN! YOU SHOULD SELL YOUR STAKE IN TSMC NOW! SIR, SIRRRRRR!!!
Warren Buffet, visionary!

 

[lexluthermiester]

Just move tsmc brick by brick to US soil and give all the employees green cards. Problem solved ?

Not by a long shot. TSMC is far from the only important tech company with facilities in Taiwan. Name your brand and they likely have a presence in Taiwan.

 

[Vayra86]

This is tenuous tech news at best. It's investor news. Might as well get info on who has major shares in Intel, AMD, or Nvidia. Never seen an article on that.

I agree, though its interesting in the case of Buffett.

You can't say TSMC isn't slowly becoming a high risk investment, if you consider the political development around Taiwan.
At the same time though TSMC is a 100% certain investment in terms of short term value. The question is, when do you extract that value, or will you sit with dividends. If China starts something (or the US), that share price might redline entirely overnight. Their new US branch isn't going to be the same thing, we all know this.

Just move tsmc brick by brick to US soil and give all the employees green cards. Problem solved ?

People aren't bricks, and those are key here. Give all employees green cards... who said they want to live in the US?

 

[64K]

I don't know but I've always held the opinion that understanding financials is a necessary component of understanding why things happen the way they do in the tech world. When a guy like Buffet backs billions of dollars out of a tech company then it's probably a good thing to pay attention to or at least be aware of it.

 

[W1zzard]

I don't know but I've always held the opinion that understanding financials is a necessary component of understanding why things happen the way they do in the tech world. When a guy like Buffet backs billions of dollars out of a tech company then it's probably a good thing to pay attention to or at least be aware of it.

That's exactly why we're sharing such bits with you.

 

[Verpal]

This or he thinks the threat of China invading Taiwan is credible. That would spook anyone. What Buffet fails to understand is that Taiwan is a close and very nearly critical economic partner to the US and most of the western world. If China attacks Taiwan, they will get pummeled. The problem is, they have viable nukes and we don't know how willing they are to use them. What needs to happen is the Chinese leadership being removed and a sensible government taking power. Otherwise we are headed into World War 3. China wants Taiwan and we can't let them have their way. We're at an impasse an the only way out is for China to yield or have their moron leadership removed.

(Note to mods: This was not intended to be a political statement, only an opinion based on a conclusion of available facts.)

I donno man, feels like China is going to wait for opportunity, such as KMT return to power, then do a naval blockade for a few month to starve Taiwan out, outright invasion will trigger lots of country, China knew it too.

 

[720p low]

If I had that much money, or even a fraction of that much money, at risk, I'd probably be looking for an exit along with an alternative investment, myself.

I mean, it's all well and good at the moment, but if somebody, either deliberately or accidentally, drops a few 2000 lb. bombs through the roofs of the fabs, I'm not so sure you can come back from that. I think that is a situation where people use the term, "costly delays..."

 

[Bones]

Just move tsmc brick by brick to US soil and give all the employees green cards. Problem solved ?

It's not "Quite" that simple.

You need sand and not just any old sand... You need the right kind of sand/silicon to start with and although you could probrably get it shipped in, that also depends on where it's coming from.
If China is the one with the sand and your country has sanctions on them guess what?


To say it like the old Soup nazi in NYC would say it....
No sand for you!!!

There is also the thing about rare earth minerals, something else China has an abundance of vs other countries and it doesn't help that Russia also has a majority, if not a lock on at least a few of these rare earth mineral types/kinds.

In either case if you can't get them and you need them, guess what you'll be doing regardless of where the building is?
Not a damn thing.

Think about it.

And that's just from a materials viewpoint, there is also a personel issue(s), logistics issue(s), equipment issue(s), enviroment/enviromental issues...... So much that goes into where a place is built to do something of this kind of specalized production nature you must take into account before scooping up the literal first shovelfull of dirt onsite to build it.

 

[TheoneandonlyMrK]

This is tenuous tech news at best. It's investor news. Might as well get info on who has major shares in Intel, AMD, or Nvidia. Never seen an article on that.

Excruciatingly hard to keep this thread on track and non political, good luck.

 

[TheinsanegamerN]

China is being restricted because it's threatening war with Taiwan and other countries are fed up with having their IP stolen. The only other sanctioned country is Russia for obvious reasons. Not sure what your argument here is other than that you either think nothing should restrict capitalism or that China and Russia should not be punished for their actions.

He's not making EITHER argument, stop trying to make this a black or white political decision. The argument is simple: with TSMC cut off from the largest growth market (china), and the west dealing with the Not A Recession (tm) its future growth will be limited, so investing into it further doesnt make much sense

 

[ThrashZone]

Hi,
Well the motto is buy low and sell high
Being 93YO dude is likely also simplifying investments for his exit
To sell or dump shares you have to have buyers so it's just money/ risk changing hands only thing that would be interesting is the dump/ sell price Buffett accepted

 

[syrup]

One thing I remember from reading a biography of Buffett many years ago was he had a particular fear of nuclear war, almost considering it inevitable, and that leads me to think he could tend toward pessimism or hypervigilance when it comes to geopolitical risks. This sort of move, even motivated just by general fears based mainly on public information, might not be out of character.

 

[Vayra86]

It's not "Quite" that simple.

You need sand and not just any old sand... You need the right kind of sand/silicon to start with and although you could probrably get it shipped in, that also depends on where it's coming from.
If China is the one with the sand and your country has sanctions on them guess what?


To say it like the old Soup nazi in NYC would say it....
No sand for you!!!

There is also the thing about rare earth minerals, something else China has an abundance of vs other countries and it doesn't help that Russia also has a majority, if not a lock on at least a few of these rare earth mineral types/kinds.

In either case if you can't get them and you need them, guess what you'll be doing regardless of where the building is?
Not a damn thing.

Think about it.

And that's just from a materials viewpoint, there is also a personel issue(s), logistics issue(s), equipment issue(s), enviroment/enviromental issues...... So much that goes into where a place is built to do something of this kind of specalized production nature you must take into account before scooping up the literal first shovelfull of dirt onsite to build it.

Mining of rare earth metals is more of a choice than an actual rarity at this point. China has taken the massive pollution it causes in its stride. We (EU) chose to preserve nature on several occasions, I can dig up the examples. We also now are moving to opening mines in Scandinavia. The resources are there. We were just too lazy and could simply pay to get our Chinese slaves to get it instead. Sounds harsh, but it really is the bitter truth.