Warren Buffett is a long-term investor. He believes in holding investment positions that can last for decades. So his decision to sell-out most of his $4 billion investment in Taiwan Semiconductor Manufacturing Corporation–shortly after making the investment–is a real wake-up call. He sees geopolitical risk in the form of a military confrontation between the United States and China over Taiwan.
Every other American technology company with major positions in China–Intel, Nvidia, Advanced Materials, and others–is headed for very difficult times ahead. Intel CEO Pat Gelsinger is in Beijing and the Chinese government seems to be telling him to fully integrate Intel’s presence there so that it is beyond the reach of the Biden Administration’s export controls on semiconductors and semiconductor-making equipment. What an extraordinary challenge that is.
Companies that don’t keep the Chinese government happy are likely to suffer the fate of Micron, which the Chinese government is now investigating. The era of being able to please both the U.S. and Chinese governments appears to be ending. The smart money, like Buffett, should be strategizing for how to deal with this new reality.
