How Warren Buffett's Decision to Sell TSMC Stocks Became an Unexpectedly Costly Misstep

When one of investing’s most revered figures deviates from core principles, the financial consequences can be staggering. Warren Buffett’s tenure as Berkshire Hathaway’s leader produced a jaw-dropping 6,100,000% cumulative return on Class A shares—a track record built on unwavering discipline. Yet a brief venture into Taiwan Semiconductor Manufacturing (TSMC) that lasted just five to nine months has resulted in an approximate $16 billion opportunity cost for his company, illustrating how even the most celebrated investors can stumble when straying from their playbook.

The Principles That Built an Empire

Understanding Berkshire Hathaway’s rise to trillion-dollar status requires examining the philosophical underpinnings that guided stock selection decisions for more than six decades. Warren Buffett’s investment framework rested on several interconnected pillars that worked in concert to generate outsized returns.

The cornerstone was his unwavering commitment to patience and long-term holding periods. Rather than chasing quarterly gains, Buffett viewed stock purchases as stakes in operating businesses to be held for years or even decades. He recognized that while markets experience inevitable cycles of expansion and contraction, periods of growth substantially outlast downturns—making high-quality enterprises ideal vehicles for wealth accumulation over extended timeframes.

Valuation discipline formed another bedrock principle. Buffett distinguished between paying a fair price for exceptional businesses versus overpaying for mediocre ones. This discernment led him to remain largely sidelined during periods of speculative froth, patiently waiting for market dislocations to present genuine bargains. Beyond raw valuation metrics, he gravitated toward firms with durable competitive advantages—market leaders whose economic moats could protect profitability through competitive pressures.

Corporate integrity and shareholder trust represented equally critical considerations. Buffett favored management teams that cultivated genuine customer loyalty and investor confidence. He understood that while trust evaporates instantly, rebuilding it requires years of consistent performance. Finally, he championed companies that deployed capital efficiently through dividends and buyback programs, aligning incentives with long-term wealth creation.

When Patience Met Pragmatism (And Pragmatism Won)

The third quarter of 2022 marked an inflection point. Following an extended bear market that depressed asset valuations, the Oracle of Omaha identified what appeared to be an attractive opportunity in Taiwan’s chip manufacturing sector. Berkshire Hathaway accumulated approximately 60 million TSMC shares, representing roughly a $4.12 billion position. The investment thesis seemed compelling: TSMC served as the foundational supplier for Apple’s processors and dominated advanced chip production across the semiconductor industry. The company’s proprietary chip-on-wafer-on-substrate (CoWoS) technology positioned it perfectly to capitalize on the burgeoning artificial intelligence revolution.

What transpired next proved remarkable for its speed and deviation from historical patterns. Form 13F filings revealed that Berkshire unloaded 86% of the position in Q4 2022—a mere months after establishing it. By Q1 2023, the entire stake had been liquidated. In May 2023, when confronted by Wall Street analysts about the surprising reversal, Buffett offered a terse explanation: geopolitical concerns surrounding Taiwan’s manufacturing capacity and potential export restrictions stemming from the CHIPS and Science Act.

The timing of this exit, however, coincided with a market inflection most investors failed to anticipate. Demand for artificial intelligence accelerated at an extraordinary pace, with Nvidia’s GPU processors commanding premium valuations and generating extensive production backlogs. TSMC, as the critical supplier for these advanced chips, expanded capacity aggressively and experienced stock appreciation that dramatically accelerated the valuation trajectory.

The Mathematics of Missed Patience

The arithmetic is starkly illuminating. Had Berkshire Hathaway maintained its original TSMC stake without selling a single share, that position would have appreciated to approximately $20 billion as of late January 2026. By comparison, the company’s actual proceeds from selling near historical lows in late 2022 and early 2023 left Berkshire with a realized $16 billion shortfall relative to what patient holding would have produced.

This shortfall represents far more than a statistical curiosity—it reflects a fundamental break from the principles that generated decades of outperformance. Where once Buffett demonstrated remarkable ability to separate legitimate long-term opportunities from short-term noise, the TSMC episode reveals how even disciplined investors can misread transformational technological shifts or allow geopolitical anxieties to override fundamental business strength.

Implications for Berkshire’s Future

With Warren Buffett now retired and Greg Abel assuming leadership responsibilities, his successor faces an implicit mandate: adhere rigorously to the philosophical framework that converted Berkshire from a troubled textile manufacturer into a diversified financial colossus. The TSMC experience, costly as it was, may serve as a cautionary reminder that disciplined patience—not reactive course correction—remains the surest path toward generating wealth within complex, volatile markets.

The lesson transcends the specifics of semiconductor valuations or geopolitical tensions. It underscores a timeless principle: maintaining investment discipline through periods of uncertainty often outperforms those who abandon their frameworks when confronted with compelling but ultimately transitory concerns.