Semiconductor ETFs Jump After Warren Buffett’s Purchase

Semiconductor exchange-traded funds surged after Warren Buffett’s Berkshire Hathaway Inc. disclosed Monday it bought more than $4 billion worth of Taiwan Semiconductor Manufacturing Co. in the previous quarter. 

ETFs including the SPDR S&P Semiconductor ETF (XSD), the VanEck Semiconductor ETF (SMH) and the Invesco Dynamic Semiconductors ETF (PSI) gained more than 4% and were among the five biggest ETF movers on Tuesday. A handful of Taiwan and semiconductor funds rounded out the top 10 ETF movers. 

Berkshire’s Securities and Exchange Commission filing disclosed 4.12 million shares of Taiwan Semiconductor, the world’s biggest contract chipmaker and supplier to Apple Inc., purchased in the third calendar quarter. Apple is the top holding in Berkshire’s portfolio. 

The company’s shares have been among the most beaten-down in what has been a declining tech market this year. Even with today’s more than 12% gain, TSMC—as it’s also known—has dropped 32% this year, more than the 27% decline in the tech-heavy Invesco QQQ Trust (QQQ). 

That decline may have been seen as a buying opportunity for Buffett, who, along with business partner Charlie Munger, are the world’s most famous value investors. Semiconductors are generally priced low at present: XSD’s price-to-earnings ratio of 17 times earnings falls beneath QQQ’s 22 times.  

In addition to the Berkshire purchases, geopolitical tensions in the region may have taken a breather after President Joe Biden met with Chinese leader Xi Jinping in Indonesia Monday and committed to working together to solve economic and security issues.  

China has promised to reunify Taiwan with the Chinese mainland, which the U.S. opposes. House Speaker Nancy Pelosi’s July trip to Taiwan in support of the country infuriated China and led the country to cut off some diplomatic channels with the U.S. 

Contact Ron Day at [email protected]