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Today is the second 
428 days
On November 14, the stock god Buffett holds platform Berkshire , and submitted a 13F quarterly report to US Securities and Exchange Commission .
report shows that in the third quarter, Berkshire spent $9 billion to buy 60.06 million shares of chip foundry giant TSMC. The market value of holdings is US$4.1 billion, equivalent to nearly 29 billion yuan, accounting for 1.39% of the total position , making it one of Buffett's top ten holdings for the first time. That night, TSMC's stock price rose by more than 10%.
This time the god of stocks made a shocking move. He bought computer IBM ten years ago, bought mobile Apple seven years ago, and now he bought chip foundry.
Buffett is no longer the consumer stock god we know who only invests in Coca-Cola , McDonald's , Disney , and Kraft Heinz, but has become a technology stock god.
But it is worth noting that mobile phone consumption has declined this year, coupled with the economic cycle adjustment, TSMC's stock price fell by nearly 60% from its peak in 2022, and its market value evaporated by US$440 billion, about 3 trillion yuan, which is equivalent to a decline of no Tencent .
Why is Buffett taking action at this time? Is Buffett old or the times have changed?
I have shared with you a unique set of "moat theory" when Buffett is choosing an investment company.
moat 1. Intangible assets, including brands, patents, and statutory licenses;
moat 2. Conversion cost;
moat 3. Network effect;
moat 4. Cost advantage.
I have carefully studied TSMC and found that its moat is reflected in: the patent and cost advantages of intangible assets.
TSMC is a well-deserved leader in the semiconductor foundry field, accounting for 60% of the global market share , especially in advanced processes, the market share of 5nm is around 90%, and 3nm is expected to be between 80%-90%, which is invincible in the industry.
Buffett's moat emphasizes the industry monopoly position, the yield is high, and TSMC's net asset return in recent years is 20%, which is Buffett's stock selection standard, and it also has a stable operating history and stable financially. Although TSMC meets the above standards, it also has undesirable aspects.
We all know the "smile curve" theory of traditional manufacturing. OEM factories are the processing and production links at the bottom of the smile curve, the link with the least technical content and the lowest profit margin.
However, TSMC broke the "smile curve" theory and turned manufacturing and processing into the link with the highest technical content and the highest gross profit margin on the industry chain .
chip foundry industry is different from Foxconn foundry enterprises. It is a technology-intensive and capital-intensive industry. An wafer factory has an investment of 10 billion US dollars. The most advanced extreme ultraviolet lithography machine is worth US$150 million.
chip foundry companies are competing for who has a large output and fast depreciation of equipment. The faster the equipment is, the more advanced the production technology is.
Therefore, TSMC needs to invest a lot of R&D funds and constantly update equipment, which is also the reason why the stock gods used to not like technology companies. Once the technology is iterated, the leader will change hands. For example, the original PC chip leader Intel was driven out of the altar by Qualcomm in the mobile phone era.
Of course, TSMC has also built its own more important moat: conversion cost.
Because chip foundry companies open technical interfaces to different design companies, the technical interfaces of leading foundry companies have almost become the de facto industry standard, locking in customers and taking the dominance.
For example, TSMC has launched an open innovation platform to help design companies such as Apple better carry out chip design.
In addition to the above moat reasons, I think Buffett is interested in this "Foxconn" found in the chip industry:
First, the influence of successor.
Since 2016, Buffett's successor has gradually gained the position, and his investment style has changed, which is reflected in investing in Apple. Currently, the total market value of Apple holders has reached US$123.6 billion, accounting for as high as 41.89%, making it the largest company holding.
Especially after Apple launched the M1/M2 chip, the integrated software and hardware ecosystem has formed a powerful moat, crushing its peers.
TSMC specially manufactures chips for Apple. The financial data in all aspects are good, so it naturally won the favor of the stock god.
The transformation of an enterprise often comes from changes in successors.
Midea passed it to professional manager Fang Hongbo from the founder He Xiangjian , opening up the road of integration and development from traditional manufacturing to digitalization and upstream and downstream industries.
Buffett's consumer stock god transformed into a technology stock god, which is also the change from the successor. At the 2022 shareholders' meeting, the successor officially came to power, but most people do not know that the investment styles of the two successors have been reflected in the changes in Berkshire's shareholding. Judging from the recent years, Buffett's handover has been very successful.
Second, TSMC has set up a factory in the United States, which further binds to the development of high-tech companies such as Apple.
These two points are the reasons why Buffett chose TSMC.
So, according to this logic, can we also copy the third quarter homework of the Stock God?
On the contrary, I think we should calm down and look at it. When a large institution buys, there will inevitably be institutions selling it in large quantities.
In the third quarter, Buffett bought TSMC, while Soros, Singapore sovereign fund Temasek and other institutional investors all significantly reduced their holdings in TSMC.
Why do big institutions have such big differences?
Because no matter how good the industry is, there will be industry cycles.
In the United States, the rate hike of cooled down inflation, coupled with the decline in mobile phone consumption and the demand for IoT chips did not meet expectations, compared with the popularity of the previous two years, chip semiconductor companies have experienced a significant high inventory cycle.
According to SIA data 2022Q2, the global semiconductor inventory days are about 108 days, second only to the peak in 2015 and the highest point in 20 years.
The demand for new energy vehicles in recent years will drive the chip industry?
As , Chairman of SMIC , , Dr. Gao Yonggang , analyzed: The chips used in the automotive industry account for a relatively small proportion of the foundry industry. It is impossible to rely on this increment to support the industry's production expansion scale. The next round of recovery depends on commodity , such as the recovery of mobile phone demand.
mobile phones account for almost half of the foundry, and no other industry can supplement the decline in demand in the mobile phone industry. New applications such as energy storage, and strainers are a new increment from scratch. This type of chip has higher quality requirements and requires a lot of time to cooperate with end users to meet market demand.
2 The excess of production capacity of naturally led to a decline in revenue and stock prices. Some institutions retreated when they saw that the situation was not good, but Buffett was a countercyclical investment of "timely help".
Last time I shared the case of TCL's "counter-cyclical" expansion in the LCD panel industry. Each industry has a cycle and will experience: price increase - capacity expansion - price decline - capacity contraction.
chip foundry companies need to invest tens of billions of dollars, and this is especially true for the heavy asset industry. Only by taking action every downward cycle, otherwise you will not dare to invest in the next generation of production lines and you will miss the future.
After many countercyclical investments, BOE and TCL have gradually gained the right to speak in LCD panels from South Korea and Japan.
Similarly, in the face of this round of economic cycle adjustment and stock market adjustment, it is also an opportunity for investors with strategic vision. Blackstone Investment Company founder Su Shimin said:
The success of any investment depends largely on the nodes in the economic cycle. Only when you dare to take action can you win a bright future.
Many entrepreneurs and investors have the saying "Those who follow the trend will prosper, and those who go against the trend will perish."
0 years ago, I was also a believer in this sentence, but after learning about the growth experience of Buffett and many entrepreneurs, I realized that countercyclical investment is the way to win.
Of course, this ability and courage of countercyclical investment require further learning.
TSMC founder Zhang Zhongmou shared his learning experience over the past 50 years in a speech:
The greatest responsibility of managers is to bring the outside world to the company. This is the only responsibility of business operators, and no one can replace them.
I hope that the learning spirit of "Buffett's transformation from consumption to technology industry and Zhang Zhongmou bringing the outside world to the enterprise" that I share today can also help our friends who grow countercyclically!
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Editor in charge | Luo Yingfan
The pictures in this article are from the Internet
