[HN Gopher] Berkshire Hathaway bought a $4.1B stake in Apple chi...
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Berkshire Hathaway bought a $4.1B stake in Apple chipmaker TSMC
Author : mikece
Score : 107 points
Date : 2022-11-15 15:40 UTC (7 hours ago)
(HTM) web link (9to5mac.com)
(TXT) w3m dump (9to5mac.com)
| SSJPython wrote:
| Very interesting. Maybe Buffett isn't too concerned about the
| geopolitical risks to TSMC? There's been tons of chatter about
| China militarily reunifying with Taiwan by 2027 but I'm guessing
| Buffett thinks it's all hot air? Because if China does invade
| Taiwan, then TSMC would be the first to suffer.
| e40 wrote:
| _> Maybe Buffett isn 't too concerned about the geopolitical
| risks to TSMC?_
|
| My first thought. I wonder if this makes any action by CCP less
| or more likely, as well as the possible intervention by the
| US??
| Kon-Peki wrote:
| If all the chip fabs in Taiwan are wiped out, the remaining
| fabs in the rest of the world are going to be insanely
| profitable, right?
|
| If this happens within the next two years, it is probably
| devastating for TSMC and a bad investment by Buffett. After
| two years, ???
| Apocryphon wrote:
| The 2027 date is not actually real:
|
| https://twitter.com/MikeBlack114/status/1571401031539367939
| jandrese wrote:
| I'd think the CCP would be wary about killing the golden goose
| with TSMC. Plus there is currently a very prominent example of
| why attempting to annex neighbors is not a good idea in the
| modern world. Ruin to economy, reputation, world standing, and
| even military prestige are all possible. Absolute
| embarrassment.
| Invictus0 wrote:
| Didn't stop them with Alibaba. Have you seen the Chinese
| stock market performance this year?
| nocsi wrote:
| I don't think having your reputation, world standing or
| military prestige be ruined is a deterrent. Countries that
| are oil exporters are raking in the money and are able to
| pursuit their geopolitical goals. Now is probably one of the
| best times to do it considering the greater global turmoil
| and energy crisis. Take a look at Russia & Azerbaijan, more
| will come.
| magic_man wrote:
| The ccp is playing the long game. I don't think they really
| care about short term economic loses. I mean look at what the
| did with hk.invading a island is hard and they probably need
| to worry about America. Otherwise Taiwan is probably in
| trouble.
| nonethewiser wrote:
| > The ccp is playing the long game.
|
| It's more of a medium game. A dictatorship can plan 5-10
| years out. But they can't exist indefinitely. By design,
| there is no succession plan.
| jasonwatkinspdx wrote:
| China's goal is to become self sufficient, but it'll take
| time. SMIC did ship 7nm chips faster than expected however.
| mrtweetyhack wrote:
| newsclues wrote:
| Most people that don't have the golden goose, don't care
| about killing it.
|
| If your enemy has a golden goose and you don't, there isn't
| much stopping you from killing it.
| NineStarPoint wrote:
| About 70% of the chips that China's extremely lucrative
| electronics industry uses come from TSMC though. They might
| not have the golden goose that is TSMC, but one of their
| own golden geese relies on it to keep running.
| HWR_14 wrote:
| Yeah, except for recent legal changes are making that
| number go down.
| hillcrestenigma wrote:
| Yes, but if you know that you can probably steal the
| enemy's golden goose if you tried hard enough, I would
| think you wouldn't kill it outright.
|
| CCP is better off keeping the world's best chip fab in a
| region they claim to be their territory.
| anotherman554 wrote:
| I don't know whether he's concerned or not, but you don't get
| high stocks returns without taking on risk.
| Trisell wrote:
| TSMC is building a huge fab here in America. It's a couple/few
| years out, but that would do a lot to alleviate this risk. And
| it could be rushed if it were prioritized as an American
| National Security Project.
|
| https://topics.amcham.com.tw/2022/08/tsmc-prepares-american-...
| hprotagonist wrote:
| s/elevate/alleviate
|
| i think.
| Trisell wrote:
| Engrish is my first language....
| thyrsus wrote:
| I'm confused: do you think China would be more likely to
| take Taiwan if it saw that nexus of economic leverage
| starting to diffuse?
| Trisell wrote:
| No. I think the CCP wants Taiwan indifferent of it being
| an economic powerhouse, or a broken 3rd world island.
| Failure to integrate Taiwan has been a stain on the CCP
| system, and it's not a system that can afford any stains.
|
| All I'm pointing out is should Taiwan be invaded, TSMC
| stands to be in a position to receive a significant
| infusion of government cash to bring that fab online
| ASAP. And once that FAB is completed the systemic risk of
| China to TSMC evaporates, and at that point I believe
| that TSMC goes to the moon.
| nicoburns wrote:
| The fab TSMC is building in America is such a small amount of
| their volume as to make almost no difference. And it won't
| even be a leading node by the time it's built.
| NineStarPoint wrote:
| I suppose it's an Apple news site, but calling them "Apple
| chipmaker" is a heavy understatement of how ubiquitous TSMC's
| chips are. Even without Apple involved TSMC would have its
| foundries running at full capacity to meet demand. Ignoring
| geopolitical concerns, TSMC is much more of a "boring"
| manufacturing company than a tech company. So it's not surprising
| that Berkshire would invest in it.
| redox99 wrote:
| It literally confused me when I read Apple chipmaker. I thought
| for a moment, did Apple buy TSMC?
| danielmarkbruce wrote:
| Most people don't know TSMC or what they do or how chips get
| made or any of it. It's just to put it in context for a good
| chunk of the readers.
|
| Put another way - you aren't the audience they have in mind
| when writing that headline.
| fearface wrote:
| I'm not a native speaker, but for me it sounds valid to call
| the company that produces the majority of Apple chips: Apple's
| chipmaker.
|
| It doesn't exclude that they produce for other companies, but
| it concludes that Apple gets most of it's chips from them.
| Right?
| cjtrowbridge wrote:
| I think the objection is about a functionalist perspective.
| Is it more accurate to call TSMC a chip manufacturer, or an
| Apple chip manufacturer?
|
| If I happen to be the person who buy's the most Starbucks at
| my local cafe, does that make it my cafe? Is the core
| function of the cafe to make coffee or to make coffee for me?
|
| Is the core function of TSMC to serve Apple's needs or to
| make chips? Do you see the difference?
| CBarkleyU wrote:
| If you were a famous person who only bought their coffee at
| that one place, and bought more coffee than (nearly)
| everyone else put together -- then yeah, I would definitely
| call that place "cjt's coffee place"
| _aavaa_ wrote:
| But the ambiguity is still there. If Gordon Ramsey loves
| a certain sushi restaurant and is the only one he eats
| at, calling it Gordon's sushi restaurant would be very
| confusing since it could realistically be either (or
| both) of the interpretations.
|
| The same can be said for Apple, which prides itself for
| how vertically integrated they are
| scarface74 wrote:
| Does it have to be the person who buys the most?
|
| "My company is having layoffs". People would know that I
| don't own my company.
| NineStarPoint wrote:
| If you're talking from the perspective of who make Apple's
| chips, yeah. This is an article about an investment Berkshire
| made though, and spent most of its time talking about his
| investment history with Apple and sort of...is structured in
| a way that says they view this investment as a doubling down
| on their Apple investment and not a investment that stands
| apart on its own terms. My issue with the phrase is less its
| use in a vacuum, and more the article as a whole in a way
| that is boiled down to how they only describe TSMC as Apple's
| chipmaker.
| HarHarVeryFunny wrote:
| Yes, and on an Apple news site that makes sense.
|
| However, in a more general (not Apple-focused) context it
| might be more appropriate to start with what the company does
| (chip foundry/fab) and if needed then note their most
| important customers (Apple, AMD, NVidia).
| nikanj wrote:
| People also routinely call Foxconn "the iPhone factory",
| especially if something bad happens there
| tester756 wrote:
| jesus christ calling TSMC an "Apple chipmaker", tactless.
| lotsofpulp wrote:
| I would call Berkshire an "Apple stockholder" since the only
| reason they have kept up with the market over the last 10+
| years is because of their Apple holdings.
| bilsbie wrote:
| Why didn't the other investments pan out?
| lotsofpulp wrote:
| Buffett missed out on massive tech company returns
| because he was opposed to investing in businesses he did
| not understand, and he did not understand tech companies.
|
| https://www.theguardian.com/technology/2016/may/16/warren
| -bu...
|
| >Asked why he had bought IBM shares rather than Apple or
| Google at Berkshire Hathaway's 2012 shareholder meeting,
| Buffett said: "The chances of being way wrong in IBM are
| probably less, at least for us, than the chances of being
| way wrong in Google or Apple ... I just don't know how to
| value them.
|
| >"I would not be at all surprised to see them be worth a
| lot more money 10 years from now but I would not buy
| either one of them. I sure as hell wouldn't short them
| either."
|
| And then Buffett made some bad bets on Kraft Heinz (3G
| was a poor partner to invest with, actually was a
| surprising move since 3G already had a poor reputation)
| and IBM, but I think it was mostly missing out on
| Facebook/Google/Microsoft/Apple/Amazon/Netflix/etc
| growth.
|
| https://www.reuters.com/article/us-berkshire-buffett-
| kraft-h...
| bombcar wrote:
| How did he not buy Apple and end up with Apple being 40%
| of Berkshire?
| lotsofpulp wrote:
| He did relent and buy Apple in 2016. The quoted portion
| is from the 2012 shareholder meeting.
|
| Also, by what measure is AAPL 40% of BRK?
| bombcar wrote:
| I went off of this: https://www.cnbc.com/berkshire-
| hathaway-portfolio/ but it may be outdated.
|
| Either way it's 5% of APPL, which means Apple is HUGE.
| lotsofpulp wrote:
| I assume that is only a list of the publicly listed
| shares BRK owns, since it totals to $345B and the market
| cap of BRK is ~$680B. They must have other assets for
| such a huge pricing discrepancy.
| twoeyes2 wrote:
| Yes. The stock portfolio is only a fraction of BRK. They
| own an entire railroad (BNSF), a very large electricity
| utility, GEICO and other insurance firms, and dozens of
| other entities - many would be Fortune 500 firms on their
| own.
| totalZero wrote:
| To be fair...
|
| Apple's their largest customer by about a factor of 5, makes up
| about a quarter of TSMC's revenue, and probably bought more
| than half of TSMC's 5nm wafer production last year.
| NineStarPoint wrote:
| Definitely Apple makes up a massive part of TSMC's profit,
| and whoever replaced them would likely not be willing to pay
| as much for the privilege. The crazy thing though is that
| TSMC has a net profit margin of about 41% (and this isn't a
| fluke, it hasn't been below 30% in the last 10 years). Even
| if they lost Apple and left the foundries empty during their
| slots, they would still be profitable.
| ramesh31 wrote:
| Hard to imagine a bigger "moat" than SOTA chip fabs. Surprised
| it took Buffett this long to move into the space.
| adam_arthur wrote:
| It's only a moat up until you fall behind. Intel had that
| moat once too
| astlouis44 wrote:
| It's all about the moat, like Buffet always says. And TSMC sure
| has a solid one.
| DancingLinks wrote:
| The mother of all Berkshire Hathaway subreddits: r/brkb
| 1letterunixname wrote:
| Is it 1/1500'th of r/brka but with 1/10k'th the vote?
| lizardactivist wrote:
| "Apple chipmaker"?
| mrtweetyhack wrote:
| warinukraine wrote:
| Does anyone else find it bewildering that a conservative investor
| like Warren Buffet makes a bet like this? I mean, if China
| invades, it's gone. This kind of uncertainty is the type of thing
| he always warns against.
| danielmarkbruce wrote:
| It's $4 billion. Berkshire is $700 billion market cap.
|
| And, while he runs Berkshire conservatively overall, some
| individual bets he makes are _very_ risky. He risks billions
| betting on the weather.
| bombcar wrote:
| He's also a trillion years old and 40% of what he owns is
| already APPL anyway. Only VANGUARD owns more of Apple than he
| does.
| newaccount2021 wrote:
| drexlspivey wrote:
| Going by the numbers, TSM is trading at <15 Trailing P/E with a
| 47% YoY growth. It's a very good buy if you discount the
| invasion risk. Seems like Buffet sees the implied risk as
| overblown.
| hnthrowaway0328 wrote:
| I think Buffet moves in high end financial and political
| circles so he probably sees what we don't see. Actually, what
| I'm thinking is, if China does invade Taiwan, China will make
| double sure that it does not spur the financial interest group
| too much, so it will almost surely guarantee the safety of the
| investment.
| heisenbit wrote:
| Maybe the analysis shows that TMSC has - to the degree possible
| in tech - a moat? The EUV tech is not easy to scale up so
| whoever is ruling the field right now has a decent chance to
| outdistance rivals for quite some time.
| m00dy wrote:
| We are almost bottom in the market then...
| LeifCarrotson wrote:
| I get that this article is on 9to5mac, but can they lay off the
| Apple references for just a breath?
|
| > _Apple chipmaker TSMC_
|
| > _[three paragraphs of background on Buffet 's opinion of
| Apple]_
|
| > _first time Berkshire has bought stock in Apple's chipmaker_
|
| > _stake in Apple chipmaker TSMC_
|
| > _Samsung has recently been upping its efforts to catch up in
| order to win back Apple business, and TSMC's Apple revenue could
| potentially be cut in half if that happened._
|
| > _Both TSMC and Samsung are also working on US production of
| advanced chips suitable for Apple devices, something which the
| Cupertino company is likely to welcome._
|
| Apple is TSMC's largest single customer, but they're only ~25% of
| their revenue. Is this an article about Berkshire Hathaway, TSMC,
| or Apple?
| hackandtrip wrote:
| > Apple is TSMC's largest single customer, but they're only
| ~25% of their revenue.
|
| Consider that Apple is also 25% of total assets of Berkshire
| (around 250$B), so it's not much of a surprise that Berkshire
| is going into the main manufacturer of the biggest stock they
| have - hence the strong linking between the wto.
| soperj wrote:
| Considering that they have slightly less than a billion
| shares as of May 2022, I don't think that number is correct.
| lotsofpulp wrote:
| https://www.cnbc.com/berkshire-hathaway-portfolio/
|
| ~915.2M AAPL shares as of Sep 30, 2022, so ~$140B worth
| (20% of BRK's market cap).
|
| For comparison, BRK market cap is ~$687B and AAPL market
| cap is $2.4T.
|
| https://companiesmarketcap.com/
| 1letterunixname wrote:
| Makes you wonder if the Sage of Omaha is encouraging Apple to
| become a Samsung with both horizontal and vertical
| integration.
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