This year, the share price of Taiwan Semiconductor (TSM) could have performed better. The production of microprocessors formerly had pandemic popularity due to their excessive pricing. This was the outcome of soaring demand and constrained supply. However, this year's progress has quickly lost steam as severe demand declines for semiconductors have been caused by worries about a possible recession. In addition, the geopolitical tensions related to China's intentions toward Taiwan also don't aid investor confidence.
That said, there's always going to be the risk that China could become more assertive over Taiwan at any time. This is why TSMC has opted to build several new factories outside the Chinese straits, which is good news as it allows the conglomerate to diversify its risks.
TSM was the Warren Buffett stock acquisition in Q3 that garnered the most attention. This year has been challenging for the stock of the world's biggest dedicated contract chip manufacturer due to macroeconomic unpredictability, weak demand, and new U.S. prohibitions on doing business with Chinese clients. But given its scale and substantial competitive advantages, Taiwan Semiconductor is well-positioned to gain in the long run.
Warren Buffett, however, reportedly remarked, "Be greedy when others are fearful." So the most successful investor in history started a multi-billion dollar position in TSMC last month, putting his advice into practice. His fund invested nearly $4.1 billion in 60 million shares of its stock. As a result, the chip manufacturer is now among Berkshire's top 10 holdings, and the news boosted TSM shares, up 35% from their year-to-date low.