Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) added to its holdings in iPhone maker Apple (AAPL) last quarter while it sold a large number of shares in chipmaker TSMC (TSMC). The move, revealed Tuesday in Berkshire’s 13F filing, shows Buffett’s company added about 333,856 shares of Apple stock for a total of more than 895 million shares during the quarter while selling 51 million shares of TSMC, or 86% of its holdings in the semiconductor company.
Berkshire’s stake in Apple is by far its most valuable holding at $116.3 billion, dwarfing its second-largest stake in Bank of America at $33.4 billion. His stake in TSMC, meanwhile, fell from $4.1 billion to just $617,725. Shares of TSMC fell more than 5.5% on Wednesday, while shares of fellow chipmakers Intel and Qualcomm fell more than 1% before midday.
Buffett’s decision to buy into TSMC in the third quarter was a big departure from the company’s previous stance on technology stocks. Berkshire only started buying up stocks of large tech companies in 2011, when it bought a stake in IBM, before giving up altogether in 2018. However, in 2016, Berkshire bought out shares of Apple and has continued to increase its stake in the iPhone maker since.
Berkshire Hathaway Chairman and CEO Warren Buffett smiles during an interview in Omaha, Neb., May 7, 2018. (AP Photo/Nati Harnik, file)
Apple shares were relatively flat on Wednesday.
Exactly why Berkshre decided to exit TSMC isn’t entirely clear, although we should learn more when the company reports earnings later this month. Of course, there’s the obvious reason that demand for PCs and server chips has fallen from its peak in the pandemic-era as inflation and interest rates have risen. But Berkshire is known for holding stakes in companies for years and not playing short-term. And the semiconductor industry will eventually recover from today’s macroeconomic woes.
There are also concerns about the geopolitical situation between China and Taiwan. The Chinese Communist Party remains steadfast in its desire to unite the mainland and Taiwan, while the US says it opposes any unilateral change in the current status quo.
The story goes on
However, Berkshire’s stance on Apple is clear. The company sees the tech giant as the top pick in the tech industry. Apple reported record sales every quarter from 2019 through the first quarter of this year as it grappled with manufacturing issues in China and the overall slowdown in smartphone sales.
However, the company has highlighted its massive installed base of 2 billion devices and its ability to grow its subscription services, which exploded by 150 million users to 935 million users last year.
long term? Apple is expected to continue to release updates to its various hardware and services for years to come. Analysts, meanwhile, widely believe the company will launch its first augmented reality headset later in 2023, which could usher in a new product category for Apple.
However, it’s questionable whether the headset will be a hit and whether consumers will be willing to shell out their cash for a piece of hardware they need to wear. We’ll likely find out more later this year.
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Do you have a tip? Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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