Warren Buffett sold all shares of TSMC due to concerns about the stability of Taiwan

She sold the Berkshire Hathaway Group, which is now owned by Warren Buffett everyone TSMC is participating in what has been described as a “surprise” move.

Buffett said that while he remained a huge fan of the company, the tensions between China and Taiwan were too great to make it a safe investment — highlighting concerns about Apple’s total reliance on Taiwan Semiconductor Manufacturing Company for all of its processors…

Apple is completely dependent on TSMC

Apple likes to have more than one supplier for all major components, to provide flexibility and better bargaining power. That included production of the A series chipsets, which were split between Samsung and TSMC.

That changed with the launch of the iPhone 7 in 2016. TSMC outperformed Samsung in making small process chips, and has held its technical lead to this day. From iPhone 7 onwards, all iPhone processors are manufactured exclusively by TSMC.

The Mac’s shift from Intel to Apple Silicon saw TSMC win all of Apple’s M-series business, too. That leaves the Cupertino company in a nerve-wracking position as its entire product portfolio — from the Apple Watch to the MacBook Pro — depends entirely on a single supplier.

Taiwan’s uncertain future

Taiwan considers itself an independent country, with its own constitution, elections, passport, currency and armed forces.

However, the Chinese government views the island as a territory belonging to its own country. Since China refuses to establish diplomatic relations with any country that recognizes Taiwan’s independence, most Western nations play the rambunctious game of pretending not to, by having “representative offices” on the island — embassies in all but name.

The possibility of China invading Taiwan was always present, but until recently it was not considered likely.

This danger has never been greater than it is today

The US Taiwan Relations Act was one of the most important deterrents against invasion. This creates a legal obligation for the United States to help Taiwan defend itself against a Chinese invasion.

However, the global response to Russia’s invasion of Ukraine showed China that while it could face economic risks by invading Taiwan, it was less likely to face military risks, fearing it could spark a nuclear war.

Increasing political and economic tensions between China and the United States have raised the stakes. Some believe that China may choose to use military ships and aircraft to blockade the island, cutting off exports. This would be an effective way to cause a great deal of economic damage to corporate America even without a full-scale invasion.

China even practiced blockade in August last year. US military advisors said at the time that the short-term risks were low, but that the medium-to-long-term outlook for Taiwan was not good.

Re-evaluating Buffett’s risk to Taiwan

bloomberg It was reported that Buffett decided to sell all TSMC shares after re-evaluating the risks involved in Taiwanese production. While TSMC makes some chips in other countries, all of its high-end production is on the island.

Buffett-owned Berkshire Hathaway Inc exited the stock in the first quarter, according to one document, after the company cut its stake by 86% late last year. Buffett told investors at its annual meeting that the move — which sent TSMC shares plummeting and investors rallying — was prompted by concerns about geopolitical tensions between China and Taiwan. […]

“I feel better in capital deployed in Japan than in Taiwan,” Buffett said earlier this month. “I wish it wasn’t, but I think that’s the reality, and I’ve re-evaluated that in light of some of the things that were going on.”

So far, AAPL investors seem unconcerned, and it’s interesting that Buffett fears for TSMC’s future but remains a huge investor in Apple, despite his complete dependence on the chipmaker.