Berkshire Hathaway Sheds Most of Its Stake in Chip Maker TSMC

Warren Buffett’s

Berkshire Hathaway Inc.

BRK.B -0.94%

sold billions of dollars worth of shares in a Taiwanese chip maker just months after taking a stake in the company.

The Omaha, Neb.-based conglomerate cut its position in

Taiwan Semiconductor Manufacturing Co.

TSM 1.92%

by 51.8 million shares in the last three months of 2022, according to a regulatory filing Tuesday. That was roughly 86% of its investment.

It was an uncharacteristic reversal for Mr. Buffett’s company, which has held on to many of its large investments for years. Berkshire first disclosed its stake in TSMC on Nov. 14, after having bought $4.1 billion worth of shares in the company by the end of the third quarter. 

TSMC’s shares fell 3.7% in Taiwan on Wednesday, although they are still around 18% higher than when Berkshire revealed it had taken a stake. A TSMC spokeswoman declined to comment on the share sale. 

Demand for devices like smartphones rose during the Covid-19 pandemic as many people worked from home, leading to a semiconductor shortage. But that shortage turned into a glut as countries came out of the pandemic and demand for electronics slumped. The prospect of a downturn in the global economy, along with higher inflation and reduced demand for consumer electronics has weighed on the outlooks of chip manufacturers. 

“During the epidemic, most consumers have already purchased the electronic products they need,” said Joanne Chiao, an analyst with market researcher TrendForce.

Shipments of smartphones fell 11.3% last year to their lowest level since 2013, according to data tracker International Data Corp. In the fourth quarter alone, shipments dropped 18.3%. TSMC and other chip makers began cutting output in the third quarter of last year to deal with the oversupply, according to TrendForce.

By the time Berkshire picked up TSMC shares, chip companies were already cutting costs, reducing output and reining in near-term capital spending plans due to slumping demand. 

The downturn in the sector comes as TSMC is in the middle of a construction spree of new factories, spending tens of billions of dollars building new plants in Arizona and Japan. The company wants to expand overseas at least in part to reduce its geopolitical risk, given tensions between Taiwan and China and growing American concerns about the semiconductor sector.

TSMC last month said its revenue could drop as much as 5% in the current quarter and that it could cut this year’s capital expenditures due to weak demand. On Tuesday, TSMC said its board approved a capital injection of up to $3.5 billion into its TSMC Arizona unit and spending of about $7 billion to upgrade its advanced-technology capacity, among other things. 

In the last three months of 2022, Berkshire sold more shares than it bought. It trimmed positions in eight companies including

Activision-Blizzard Inc.


Bank of New York Mellon Corp.

, while it added to its positions in

Apple Inc.,

Louisiana-Pacific Corp.


Paramount Global.

Write to Dave Sebastian at [email protected] and Dan Strumpf at [email protected]

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