eprinted from Semiconductor Industry Watch
Big investment firms such as Macquarie, Fidelity Investments, Tiger Global and Coatue were the biggest buyers of US-listed shares in Taiwanese contract chipmaker Taiwan Semiconductor Manufacturing Co in the first quarter, while Warren Buffett's Berkshire Hathaway sold its remaining stake in the company, according to regulatory filings.
Berkshire Hathaway said in February that it had reduced its stake in Taiwan Semiconductor. On Monday, the company said it had sold its remaining stake.
At Berkshire's annual meeting earlier this month, Mr Buffett said Taiwan Semiconductor was a "fantastic company" but that he felt more comfortable investing in Japan than Taiwan, reflecting growing tensions between the US and China.
So-called 13-F documents that disclose investment firms' portfolios are closely watched for trends, although the data are released late and can be dated.
Macquarie added about 78m new TSMC American Depositary shares to its existing position, leaving it with $7.3bn in assets at the end of March. Fidelity bought 14.1 million new shares, increasing its bet on the company to nearly $4 billion.
Coatue Management, founded by Philippe Laffont, took a new position in the chipmaker as it bought 5.9 million shares worth $548.9 million. Tiger Global Management acquired shares worth $147.8 million.
TSMC's U.S.-listed shares are up nearly 14.5 percent this year.
Buffett raves about Taiwan Semiconductor Manufacturing: There is no comparable company in the chip industry
It's saying a lot that billionaire investor Warren Buffett didn't praise U.S. semiconductor makers at Berkshire Hathaway's annual meeting on Saturday. Instead, Buffett heaped praise on Taiwan Semiconductor Manufacturing, in which he once invested.
"Taiwan Semiconductor is one of the best managed companies and important companies in the world," Buffett, 92, told a packed CHI Health Center in Omaha, Nebraska. "I didn't like its location and reevaluated it,...... [But] no one in the chip industry comes close, at least in my opinion."
The speed with which Warren Buffett, the legendary buy-and-hold investor, exited a large position in Taiwan Semiconductor surprised some observers. Berkshire Hathaway revealed in February that it sold its 86 percent stake in Taiwan Semiconductor Manufacturing, which it had bought a few months earlier for about $4.1 billion.
Berkshire currently holds a 0.2 per cent stake in Taiwan Semiconductor.
In April, Buffett explained that he sold the company amid heightened geopolitical tensions between China and Taiwan and between China and the United States. "Great people and great competitive position, but I'd rather find it in the United States," Buffett added on Saturday.
Reuters pointed out that the price of the TSMC purchase suggested that it was Buffett's decision, rather than one that had been assumed to have been made by his right-hand man. But holding it for just one season doesn't jibe with Buffett's preference for long-term investing, which has raised eyebrows.
Mr Buffett told the Nikkei that TSMC was a well-managed company but that its money had better places to go.
He also acknowledged in an interview with CNBC that geopolitical tensions were a factor in the selling, but that was beyond the company's control.
"I reassessed that part [of the geopolitical reference], but it wasn't TSMC, management, things like that," he said.
Taiwan Semiconductor is seen as a dominant player in advanced chip manufacturing. The company supplies chips to tech giants Apple and Qualcomm, among others. Analysts praised the company for taking advantage of major shifts in technology, particularly the need for 5G wireless and faster-processing data centers.
The company plans to spend as much as $36bn on capital expenditure this year.
Shares of Taiwan Semiconductor are up 120% over the past five years, outperforming the S&P 500's 55% gain over the same period.
Chip rivals such as Intel are trying to regain market share by building new factories and improving innovation in the United States. Other companies like Qualcomm and AMD are starting to talk up initiatives in the hot artificial intelligence space.
Intel CEO Pat Gelsinger told Yahoo Finance Live: "We're pushing for a software environment that benefits everyone in the world. "With the democratisation of AI, generative AI is becoming mainstream, and that's where Intel comes in."
TSMC expands global production capacity
In its business report, foundry leader TSMC said it will continue to focus on optimizing manufacturing operations in 2023 to improve efficiency and productivity, support high volume production of the 3-nanometer N3 process this year and beyond, increase capacity outside Taiwan to expand future growth potential, reach out to global talent, and hope to build a TSMC culture among all employees wherever it operates.
The company said 2022 would be a milestone year for the company, with 13 consecutive years of high revenue and strong earnings growth. The shipments of wafers reached 15.3 million 12-inch wafers equivalent, an annual growth of 7.75%. The sales amount of advanced processes below 7 nm increased from 50% to 53%, and the global output value of semiconductors excluding memory increased from 26% to 30%.
Looking ahead to 2023, with general economic and geopolitical uncertainties persisting, TSMC noted its continued commitment to optimizing manufacturing operations, including "digitizing" the company's fabs, to improve efficiency and productivity to support a high degree of mass production of the N3 process in 2023 and beyond.
The company said it is increasing investment in R&D to continue to expand its overall competitiveness and technology leadership, maintain its technological pace through industry-leading advanced processes and 3DIC solutions, and provide the value of its technology platform to help customers enhance product competitiveness and support future development advantages.
TSMC said it was increasing capacity outside Taiwan to expand future growth potential, access global talent and further enhance customer trust. As we expand our global footprint and recruit around the world, our top priority is to identify, attract and hire people who align with our core values and principles so that we can build a TSMC culture among all employees wherever we operate.
In terms of technology development, TSMC began mass production of the 4 nm N4 process last year, and launched the N4P and N4X process technologies to support the next wave of 5 nm products. The company noted that the former is well advanced in development and is expected to be mass-produced this year, while the latter is the first technology focused on high speed computing (HPC), high workload, and is expected to finalize customer product designs this year.
As the 3-nanometer N3 process entered mass production last year, the N3E process with better performance, power consumption and yield is expected to be mass-produced in the second half of this year. TSMC noted that the N3 and N3E are highly engaged, with more than double the number of product design decisions in the first and second years of mass production than the N5, and that the N3 family is expected to be another large scale process technology with long-term demand.
According to TSMC, the 2 Nano technology will use a Nanosheet transistor structure, N2 is 10 to 15 percent faster than N3E at the same power consumption, and 25 to 30 percent lower power consumption at the same speed, to meet the increasing demand for energy-efficient computing. N2 will provide customers with optimal performance, cost, and technology maturity, and further extend future technology leadership.