Warren Buffett’s Berkshire Hathaway Sold 85% of $4 Billion Position in Taiwan’s TSMC
April 28th, 2023If China was to invade Taiwan, there might be a plan to prevent any of TSMC’s fabs from falling into Chinese hands:
The US would sooner see TSMC fabs destroyed than fall into Chinese hands should Xi Jinping invade Taiwan, according to a former national security advisor to the Trump administration.
“The United States and its allies are never going to let those factories fall into Chinese hands,” Robert O’Brien said at the Global Security Forum in Qatar this week.
In O’Brien’s mind, a successful invasion of Taiwan would reposition China as the leading semiconductor manufacturing power almost overnight. Or as he put it, China would become “the new OPEC of silicon chips.” O’Brien contends the US will destroy Taiwanese fabs to prevent China from gaining the technological advantage.
Of course, doing so would have severe consequences for the world economy. Last year the US National Security Agency estimated the loss of TSMC at more than $1 trillion dollars.
The former advisor’s comments breathe new life into rumors that the US would enact a scorched-earth policy to prevent sensitive semiconductor tech from falling into Chinese hands.
The effect of such an invasion would be like a slow moving EMP attack hitting the developed world. Instead of everything going down in seconds, it might take weeks or months.
What Country Produces the Most Semiconductors?
Taiwan
The tiny East Asian country of Taiwan, whose diplomatic status is disputed by China, is the world’s undisputed leader in terms of raw semiconductor manufacturing. This is largely due to the work of a single company, Taiwan Semiconductor Manufacturing Co. (TSMC) which singlehandedly manufactures roughly 50% of the world’s semiconductors. Unlike semiconductor manufacturers such as Samsung or Intel, which produce semiconductors for use in their own products, TSMC manufactures semiconductors for many other companies, including Apple, AMD, Nvidia, Qualcomm, and more. This is known as the foundry model of business.
And now, I wonder what Warren Buffett knows?
Via: Nikkei:
Buffett also commented on the sale of the bulk of Berkshire’s stake in Taiwan Semiconductor Manufacturing Co. After buying more than $4 billion in shares in the world’s biggest chipmaker between July and September 2022, it slashed its holdings by 85% to $617 million by the end of 2022.
Buffett said geopolitical tensions were “a consideration” in the divestment. He described TSMC as a well-managed company but added that Berkshire had better places to deploy its capital.
Astute reasoning. Slow EMP. What a thought.