Buffett Favors Japan Over Taiwan as He Laments Geopolitics

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(Bloomberg) — Warren Buffett said he prefers deploying capital in Japan instead of Taiwan, lamenting how geopolitics led his firm to cut stakes in the island’s chip-maker giant. 

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Taiwan Semiconductor Manufacturing Co. is one of the best managed and most important companies in the world, Buffett said at Berkshire Hathaway Inc.’s annual meeting on Saturday. “There’s nobody in the chip industry that’s in their league,” he said.

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That didn’t stop Berkshire from slashing its holding in TSMC by 86% during the fourth quarter, after reporting a $5 billion investment in November — a move Buffett has blamed on rising tensions between China and Taiwan. 

Buffett urged China and the US to keep a lid on their rivalry. 

“It’s imperative that China and the United States both understand what the game is and that you can’t push too hard,” he said at the meeting in Omaha, Nebraska. “Both places are going to be competitive and both can prosper.”

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Speaking at the same event, Buffett’s long-time business partner Charlie Munger called for “reciprocal kindness” between the two superpowers. 

TSMC rose as much as 1.8% in Taipei on Monday morning. 

Buffett signaled a willingness to make further investments in Japan after recently raising stakes in trading companies there. Berkshire now owns 7.4% of those businesses, but won’t go over 9%, he said. 

Greg Abel, the heir apparent to Buffett who joined him on a trip to Japan last month, called them “an incredible” investment. 

Buffett said he wanted to introduce Abel to executives from the five trading houses, recognizing that there will be continued investments and relationships there.

Japan’s trading houses — or “sogo shosha” — have deep roots in the country’s economy, dating back hundreds of years, and provide everything from food to energy. 

Shares of Itochu Corp. rose as much as 1.5% on Monday morning in Tokyo. Mitsubishi Corp. and Sumitomo Corp. also gained, while Marubeni Corp. was little changed and Mitsui & Co. fell. 

“The Japanese thing was simple,” Buffett said. “I like looking at companies. I like looking at figures about companies.”