Warren Buffett News Reveals the $16 Billion Cost of Breaking His Own Investing Rules

Recent developments in Warren Buffett news highlight a rare but costly exception to the investing principles that built Berkshire Hathaway into a trillion-dollar enterprise. What began as a $4.12 billion stake in Taiwan Semiconductor Manufacturing has transformed into a cautionary tale about the dangers of abandoning one’s core investment philosophy—a mistake that currently costs the company close to $16 billion.

When Warren Buffett stepped down from his role as Berkshire Hathaway’s CEO, he left behind an extraordinary legacy: Class A shares (BRK.A) that delivered nearly 6,100,000% in cumulative returns over more than five decades. This performance wasn’t accidental. It was the direct result of disciplined adherence to a carefully developed investment methodology. Yet this particular decision regarding Taiwan Semiconductor Manufacturing stands as a striking departure from the very principles that engineered that remarkable success.

The Bedrock of Buffett’s Investment Success

Understanding what went wrong requires first examining what went right for six decades. Buffett’s investment philosophy rested on several interconnected principles that proved remarkably effective across multiple economic cycles.

The cornerstone was an unwavering long-term perspective. Rather than treating stock purchases as temporary positions to be rotated based on market conditions, Buffett approached investments with the intention of holding quality businesses for years, sometimes decades. He recognized that while economies experience inevitable boom-and-bust cycles, periods of expansion historically outweigh downturns. Superior companies are positioned to compound wealth during these extended growth periods.

Buffett also maintained exacting standards around valuation. Getting a reasonable price for an exceptional business always trumped chasing bargains in mediocre companies. He famously demonstrated patience, sitting on cash reserves when valuations appeared stretched and only deploying capital when price dislocations created genuine opportunity. This selective deployment approach became a hallmark of his success.

Competitive advantages and economic moats represented another essential component. Buffett deliberately sought stakes in industry leaders—companies whose market positions were sustainable and difficult to disrupt. These weren’t commodity players; they were dominant franchises with defensible positions.

Additionally, Buffett prioritized corporate trustworthiness. Beyond experienced management teams, he gravitated toward enterprises that built deep customer loyalty. Trust, he understood, erodes quickly but takes years to construct. Finally, capital-return programs mattered significantly. Businesses that returned capital to shareholders through dividends and buyback programs aligned incentives with long-term value creation.

Where Strategy Met Misjudgment

Despite the track record of success, the third quarter of 2022 saw a notable exception. During this period—Berkshire’s last quarter as a net buyer of equities—the company purchased 60,060,880 shares of Taiwan Semiconductor Manufacturing (TSMC) for approximately $4.12 billion. On the surface, the timing appeared sound. The 2022 bear market had created genuine price dislocations, meeting Buffett’s requirement for attractive entry points.

TSMC’s strategic positioning seemed compelling as well. As the world’s leading chip foundry, the company manufactures the majority of advanced semiconductors for Apple, Nvidia, Broadcom, Intel, and Advanced Micro Devices, among other technology giants. Critically, TSMC’s chip-on-wafer-on-substrate (CoWoS) technology was positioned at the intersection of the emerging artificial intelligence revolution, enabling the processing power necessary for AI-accelerated data centers.

The investment appeared to check every box of Buffett’s investment framework. Yet this position would prove short-lived—a fundamental violation of his long-term holding principle.

The Premature Exit and Its Consequences

SEC Form 13F filings document what happened next. In the fourth quarter of 2022, just months after the initial purchase, Berkshire Hathaway sold 86% of its Taiwan Semiconductor stake, offloading 51,768,156 shares. By the first quarter of 2023, the entire position had been liquidated. What should have been a multi-decade holding had lasted approximately five to nine months.

Buffett’s explanation to Wall Street analysts in May 2023 was straightforward: “I don’t like its location, and I’ve reevaluated that.” His concerns likely centered on the CHIPS and Science Act, legislation passed in 2022 under the Biden administration designed to incentivize domestic semiconductor manufacturing. The subsequent restrictions on exporting high-powered AI chips to China apparently prompted concerns about Taiwan’s geopolitical exposure and potential future export limitations.

However, the timing of this exit proved remarkably inopportune. The artificial intelligence boom accelerated dramatically following Buffett’s exit, creating unprecedented demand for GPU technology. TSMC responded by aggressively expanding its monthly CoWoS wafer capacity, and the company’s growth rate surged accordingly. The company’s stock appreciation followed suit.

By July 2025, Taiwan Semiconductor joined the exclusive trillion-dollar market capitalization club. Had Berkshire Hathaway maintained its original position without selling a single share, the stake would be valued at approximately $20 billion as of late January 2026. Instead, the opportunity cost—representing the value Buffett forfeited through this premature exit—stands at nearly $16 billion.

The Broader Implications

This episode carries significance beyond the mere dollar amount. It illustrates how even investing legends can temporarily stray from proven principles, and how costly such deviations can become. The geopolitical concerns about Taiwan’s semiconductor concentration weren’t unreasonable; they reflected legitimate macro considerations. Yet they conflicted with the long-term investment horizon that had defined Buffett’s entire career.

For Berkshire Hathaway under new CEO Greg Abel, the lesson reinforces the importance of maintaining consistency in investment methodology. The company’s future success will likely depend on adhering to the very principles that Buffett developed but, in this instance, chose to abandon. Long-term capital allocation discipline, patient capital deployment, and resistance to short-term diversions remain the template for sustainable wealth creation.

The Taiwan Semiconductor position ultimately became the inverse of Buffett’s most famous trades: instead of capturing extraordinary compounding over decades, it captured opportunity cost. In one of the investment world’s most ironic inversions, history’s greatest investor produced his most expensive reminder about the power of staying true to one’s investment principles.