Warren Buffett's $16 Billion Taiwan Semiconductor Misstep: A Rare Lapse in Discipline

The Oracle of Omaha built Berkshire Hathaway into one of the world’s most formidable investment vehicles, delivering nearly 6,100,000% in cumulative returns on Class A shares over his six-decade tenure. Warren Buffett’s success stemmed from an unwavering commitment to core investing principles: patience, long-term thinking, value discipline, and a focus on competitive moats. Yet in 2022-2023, Warren Buffett made a decision that contradicted everything he stood for—and it has cost Berkshire dearly.

In the third quarter of 2022, during a bear market when price dislocations create opportunities, Buffett’s team loaded up on Taiwan Semiconductor Manufacturing (TSMC), purchasing approximately 60 million shares for $4.12 billion. The thesis was compelling: TSMC controlled the semiconductor foundry landscape, supplied advanced chips to Apple, Nvidia, Intel, and other tech giants, and was positioned at the epicenter of the artificial intelligence revolution. Their cutting-edge CoWoS technology stacked graphics processing units (GPUs) with high-bandwidth memory for data centers hungry for AI computing power.

But Warren Buffett’s conviction evaporated almost as quickly as it formed. By the fourth quarter of 2022, Berkshire had sold 86% of its stake. By the first quarter of 2023, the position was completely closed out. The entire investment lasted roughly six to nine months.

The Warren Buffett Philosophy That Built Berkshire

To understand why this Taiwan Semiconductor exit represents such a glaring anomaly, you must understand Warren Buffett’s foundational investment rules. These principles were never formally written down, yet they guided Berkshire’s ascent to trillion-dollar status.

Long-term ownership was always paramount. Warren Buffett purchased business stakes with the intention of holding them for decades, not quarters. He understood that stock markets cycle through boom and bust periods, but expansion phases consistently outlast downturns. Quality businesses compound wealth over extended time horizons.

Value discipline ran deep through every investment decision. Warren Buffett would wait patiently for mispricing to emerge, avoiding the temptation to overpay for quality. He often sat idle during bull markets, building dry powder for genuine bargains.

Competitive advantages and sustainable moats mattered enormously. Warren Buffett gravitated toward industry leaders with defensible market positions and durable customer relationships. TSMC certainly fit this template—it dominated its category.

Capital discipline and shareholder-friendly programs represented another pillar. Dividend payments and share buybacks aligned management incentives with long-term investors, rather than short-term traders.

By nearly every metric, TSMC appeared to match Warren Buffett’s ideal company profile during Q3 2022.

The Reasoning Behind the Retreat

In May 2023, Warren Buffett explained his swift exit with a telling comment: “I don’t like its location, and I’ve reevaluated that.”

The geopolitical calculation centered on Taiwan’s precarious position between the United States and China. The 2022 CHIPS and Science Act aimed to boost domestic American semiconductor capacity, and the Biden administration began restricting exports of advanced AI chips to China. Warren Buffett apparently concluded that Taiwan faced similar headwinds—possible export curbs or geopolitical escalation that could undermine TSMC’s growth trajectory.

It was a reasonable concern on the surface. But Warren Buffett’s timing could scarcely have been worse.

The Cost of Breaking the Rules

TSMC’s foundry operations exploded in 2023 and beyond. Nvidia’s GPU demand proved insatiable, creating massive backlogs. TSMC responded by aggressively expanding its CoWoS manufacturing capacity. The company’s growth accelerated, and its stock appreciation followed.

By July 2025, TSMC became the 12th public company to join the exclusive trillion-dollar market cap club. Had Warren Buffett retained his initial stake without selling a single share, that $4.12 billion investment would have grown to approximately $20 billion by January 2026.

The damage: nearly $16 billion in unrealized gains forfeited.

This represents Warren Buffett’s most consequential misjudgment in recent memory. For an investor whose entire reputation rests on long-term conviction, the half-year holding period in TSMC stands as a jarring departure from form. The geopolitical concerns proved manageable; the company thrived regardless. Export restrictions never materialized at the scale Warren Buffett apparently feared.

Lessons for Berkshire’s Future

Berkshire’s new CEO, Greg Abel, will almost certainly internalize this costly episode. The path forward involves doubling down on the exact principles that Warren Buffett violated with TSMC: patience over timing, long-term orientation over quarters, and conviction over second-guessing.

When Warren Buffett adhered to his discipline, Berkshire performed extraordinarily. When he abandoned it, even briefly, the market exacted a steep price. That’s perhaps the clearest lesson from the $16 billion question mark hovering over Taiwan Semiconductor.