Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) boosted its holdings in iPhone maker Apple (AAPL) last quarter, while ditching a huge number of shares in chipmaker TSMC (TSMC). The move, which was revealed in Berkshire’s 13F filing on Tuesday, shows Buffett’s firm added some 333,856 shares of Apple in the quarter, for a total of more than 895 million shares, while shedding 51 million shares of TSMC, or 86% of its holdings in the semiconductor firm.
Berkshire’s stake in Apple is by far its most valuable holding at $116.3 billion, dwarfing its second largest holding of $33.4 billion in Bank of America. Apple makes up 39% of the total value of Berkshire's holdings, down from 42% in its prior 13F.
Its shares of TSMC, meanwhile, fell from $4.1 billion to just $617.7 million. Shares of TSMC were down more than 5.5% on Wednesday, while shares of fellow chipmakers Intel and Qualcomm were off more than 1% before noon.
Buffett’s decision to dive into TSMC in Q3 was a major departure from the company’s prior stance on tech stocks. Berkshire only started buying up shares of major tech companies in 2011 when it purchased a stake in IBM, before ditching it entirely in 2018. In 2016, however, Berkshire bought up shares of Apple, and has continued to increase its holdings of the iPhone maker since.
Shares of Apple were relatively flat on Wednesday.
Exactly why Berkshre chose to ditch TSMC isn’t entirely clear, though we should learn more when the company reports its earnings later this month. Of course, there’s the obvious reason that demand for PCs and server chips has declined from their pandemic-era peak, as inflation and interest rates have increased. But Berkshire is known for holding shares in companies for years, not short-term plays. And the semiconductor industry will eventually recover from today’s macroeconomic issues.
There are also concerns about the geopolitical situation between China and Taiwan. The Chinese Communist Party is holding steadfast in its desire to unify the mainland and Taiwan, while the U.S. says that it opposes any unilateral changes to the current status quo.
Berkshire’s stance on Apple, however, is clear. The company sees the tech giant as its best bet in the tech industry. Apple reported record quarterly revenue in every quarter from 2019 until Q1 this year, as it dealt with manufacturing issues in China and the broader slowdown in smartphone sales.
The company, however, has highlighted its massive 2 billion device installed base, and its ability to grow its subscription services, which exploded by 150 million users last year to 935 million users.
The long term? Apple is expected to continue to pump out updates to its various hardware and services in the coming years. Analysts, meanwhile, largely believe the company will debut its first augmented reality headset later in 2023, which could kick off a new product category for Apple.
Still, there are questions as to whether the headset will be a hit, and whether consumers will be willing to spend their money on a piece of hardware they need to wear. We’ll likely find out more later this year.
Correction: A prior version of this article listed Berkshire's TSMC holdings at $617,725. It's actually $617.7 million.
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