Warren Buffett’s Taiwan Semiconductor sale shakes semiconductor stocks

Yahoo Finance’s Daniel Howley joins the Live show to discuss the decline in stock for Taiwan Semiconductor following Warren Buffett’s surprise sale.

Video Transcript

RACHELLE AKUFFO: But first, a look at our top story– cutting back on the chips. Warren Buffett suddenly selling off his holdings in Taiwan Semiconductor, causing shares of the chipmaker to fall, as investors wonder if he knows something that others don’t. The reversal all the more notable because of how closely the sale follows Buffett’s earlier disclosure of his holdings. Buffett, of course, is legendary for his long-term bets on names like Coca-Cola and Apple. So let’s get a deeper dive with Yahoo Finance’s Dan Howley. I mean, when the oracle makes a move, people pay attention here, Dan.

DAN HOWLEY: That’s right, Rachelle. We looked at kind of the numbers as far as how much he’s dropped in terms of TSMC. He had shed about 86% of his holdings, Berkshire Hathaway, rather, of TSMC. That goes from essentially what was 51 million shares all the way down to around– I actually have the number right here– $4.1 billion worth of shares to $617,000 in shares of TSMC. The company’s stock price down 5.5% the last I took a look. But increased the value of how much he has in Apple– that’s now at $116.3 billion.

And so there’s a few things that are worth looking at here when it comes to TSMC. And you can obviously recognize that if TSMC’s going down, the rest of the industry, the semiconductor industry, would be going down as well. But there’s a few things going on here with TSMC and the broader chip market. That is what’s happening in terms of demand.

Obviously, during the pandemic, we saw people go out, purchase everything that needed a semiconductor, whether that’s cars, phones, laptops, monitors. And now people are pulling back on the buying of at least those tech goods, those phones, monitors, laptops, desktops, things along those lines. So that could be part of the reason that we’re seeing.

But as you pointed out, and as obviously is well known for Buffett and Berkshire, they hold on to things. So this seems to be a blip as far as the long tail story of semiconductors would be. There is, however, also the story of China and its desire to unify Taiwan and China as one country. You know, obviously, the US’s stance is they oppose any kind of unilateral change on the status of Taiwan. But this has raised a lot of concerns as to what this means for companies like TSMC.

And, oh, by the way, they also have manufacturing capabilities in China. What does that mean when you look at how the US is trying to cut off some of China’s ability to get access to Western technology? So there’s this larger issue going on as far as the politics, the geopolitics, of what impacts TSMC. But then we look at something like Apple, and then, obviously, we saw him digging deeper in there, buying up more shares of that company, his largest holding as far as value.

And that has to do a little bit more potentially with what he sees going forward for Apple. Yes, they did have a decline in revenue, but prior to Q1’s decline from 2019 onward, they had record revenue each quarter. We also have that headset coming, so that means they could be getting into a new hardware space. Not too sure if that means we’re actually going to see that take off, though.

RACHELLE AKUFFO: Certainly a lot at play here with Apple, obviously, turning towards its own chips, geopolitical issues, and then on top of that, going from a chip shortage to a chip glut. So interesting to see how this plays out. But an interesting move there from the oracle of Omaha. Thanks so much to our very own Dan Howley.