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The decision by Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) to buy Taiwan Semiconductor Manufacturing (NYSE: TSM), better known as TSMC, and then sell most of that stock a short time later seemed to confuse most industry observers. Buffett and his company pride themselves on long-term investments, and given TSMC’s lead in semiconductor manufacturing, it looked like what many would consider a “Buffett stock.”
However, in a recent interview, Buffett said that his lieutenants bought the stock and that he decided to reverse most of that decision due to geopolitical concerns. Should Buffett’s reasoning concern investors about the semiconductor industry? Let’s take a closer look.
TSMC looks like a Buffett stock, and its industry influence and essential nature make it one of the great foreign companies in which to invest. It claims nearly 60% of the world’s third-party chip production, according to TrendForce. Additionally, since it produces most of its chips in Taiwan, it is the main reason why approximately two-thirds of worldwide chip production takes place on the island. It is the primary manufacturer for companies such as Qualcomm, Advanced Micro Devices, and Apple (NASDAQ: AAPL), Berkshire’s largest holding.