Following the dumping of Taiwan Semiconductor Manufacturing Co. (TSMC) American depositary receipts (ADRs) by Berkshire Hathaway, a holding company run by billionaire investor Warren Buffett, Taiwanese analysts focused on the uncertain outlook for the semiconductor industry as the cause.
Berkshire Hathaway cut its holding of TSMC’s ADRs by 86 percent last quarter down to 8.3 million units, with the value of the holding estimated at about US$618 million, according to the latest regulatory filing.
This comes roughly three months after Berkshire Hathaway said it had bought 60.06 million ADRs, worth more than US$4.1 billion, in the Taiwanese chipmaking company in the third quarter of 2022.
After Berkshire Hathaway’s stock holding disclosure, TSMC shares dropped 3.67 percent to close at NT$525 on the Taiwan stock market Wednesday, contributing about 165 points to the overall drop of 221.59 points on the Taiex.
Concerns over the prospects of the industry might be the reason for Berkshire’s quick sale of TSMC ADRs, according to equity market analyst Wang Chao-li (???).
Global semiconductor sales were down in the second half of last year and industry production value is expected to contract this year due to excess inventory, Wang said.
Meanwhile, Andrew Lu (???), ex-head of regional semiconductor research at Salomon Smith Barney, said via a Facebook post that short-term trading of TSMC ADRs was not in line with Buffett’s style, characterized by usually holding best value stocks for around a decade.
The quick sale is believed to be the result of a decision by the company’s managers, according to Lu.
After Buffett’s Berkshire Hathaway cut its position in the world’s largest contract chipmaker, investors should keep a close watch on demand from TSMC’s global customers, changes in inventory and the effects of a sharp rise in AI apps on TSMC’s AI chip customers, Lu said.
Meanwhile, investors should focus on TSMC’s capital expenditure, progress in the company’s mass production of 3-nanometer chips, and when demand for 5-nm and 7-nm chips surges, Lu said, adding that when the company increases its dividend payout ratio is also a matter of interest.
Source: Focus Taiwan News Channel