Stocks in chip makers climbed on Tuesday following news that
Warren Buffett’s Berkshire Hathaway
bought more than $4 billion of
Taiwan Semiconductor
shares in the third quarter.
The purchase of stock in the world’s largest contract chip maker adds to hopes that chip stocks might be near or at the bottom of their cycle, after a series of warnings about waning demand and U.S.-China tensions darkened the sector’s outlook.
In particular, it’s a vote of confidence from a major investor that
Taiwan Semiconductor
(ticker: TSM) isn’t under threat from a potential Chinese invasion of the self-governing island of Taiwan—and the knock-on effect that would have for its customers. The company is a major supplier to Advanced Micro Devices (AMD), Qualcomm (QCOM), and Nvidia (NVDA).
Taiwan Semiconductor’s
American depositary receipts were up 13% on Tuesday. Berkshire Hathaway purchased just over 60 million of the company’s American depositary shares, according to its latest 13F filing, filed after the market closed on Monday.
AMD shares were up more than 6% on Tuesday. That added to gains made on Monday when two analysts upgraded the stock.
Qualcomm
rose more than 5% and
Nvidia
climbed more than 3%.
Sentiment around chip makers was also boosted after Germany’s
Infineon
(IFX. GERMANY) on Monday upgraded its long-term targets against a backdrop of increasing demand for semiconductors, as it posted fourth quarter earnings that beat expectations.
Speculation on social media revolved around whether Buffett or one of his portfolio managers—Todd Combs or Ted Weschler—led the Taiwan Semiconductor investment. Barron’s has attempted to contact Berkshire Hathaway for comment.
Buffett has traditionally been wary of technology investments outside his famed “circle of competence,” although Berkshire Hathaway’s largest public investment is in
Apple
(AAPL) and it also has holdings in
HP
(
HP
) and cloud database company
Snowflake
(SNOW).
Write to Adam Clark at adam.clark@barrons.com
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