The Cost of Becoming Warren Buffett: How a $4 Billion TSMC Bet Taught the Oracle of Omaha His Own Lessons

For decades, becoming warren buffett meant mastering one fundamental principle: patience. It meant buying quality companies at reasonable prices and holding them through multiple market cycles. Yet in 2022, the legendary investor broke his own cardinal rule with Taiwan Semiconductor Manufacturing, a decision that would ultimately cost Berkshire Hathaway close to $16 billion in unrealized gains. This costly misstep offers an invaluable lesson about what it truly takes to become a world-class investor.

When Long-Term Investing Met Short-Term Thinking

During the third quarter of 2022, when geopolitical tensions and economic uncertainty had created genuine price dislocations in the stock market, Buffett oversaw Berkshire’s acquisition of approximately 60 million shares of Taiwan Semiconductor Manufacturing (TSMC). The $4.12 billion investment seemed perfectly aligned with his philosophy. TSMC was a global leader in semiconductor foundry services, producing the advanced chips that power everything from Apple devices to Nvidia’s groundbreaking AI accelerators.

At the time, the artificial intelligence revolution was just beginning to accelerate. TSMC’s chip-on-wafer-on-substrate (CoWoS) technology—capable of stacking graphics processing units with high-bandwidth memory—positioned the company at the epicenter of an emerging mega-trend. For someone becoming warren buffett, this looked like an ideal long-term position: a dominant industry player, positioned for transformational growth, purchased at a reasonable valuation during a bear market.

But Berkshire’s ownership would prove remarkably brief. Within just five to nine months, the firm liquidated 86% of its stake in the fourth quarter of 2022, completely exiting the position by the first quarter of 2023. In May 2023, Buffett explained his exit to Wall Street analysts with a single comment: “I don’t like its location, and I’ve reevaluated that.” His concern stemmed from the 2022 CHIPS and Science Act, which aimed to boost domestic semiconductor manufacturing in the United States. Buffett apparently worried that geopolitical tensions and export restrictions could threaten Taiwan-based chip production.

The Five Principles That Made Becoming Warren Buffett Possible

To understand why this decision represented such a dramatic departure, it’s essential to examine the foundational investing principles that built Berkshire Hathaway into a $1 trillion company. These weren’t rigid rules written in manifestos—they were the unwritten codes that guided every major allocation decision over six decades.

Long-term ownership mentality. The first principle involves viewing stock purchases as miniature business acquisitions, with the expectation of ownership lasting years or even decades. Buffett recognized that while markets experience predictable boom-and-bust cycles, periods of expansion significantly outnumber and outlast periods of contraction. This reality means that ownership in quality enterprises compounds wealth over time.

Value at reasonable prices. The second principle distinguishes between true bargains and value traps. Buffett would rather pay a fair price for an exceptional business than acquire a mediocre company at a steep discount. This is why he “sat on his hands” during periods of market exuberance, waiting for prices to disconnect from intrinsic value before deploying capital.

Sustainable competitive advantages. The third principle focuses on what Buffett calls “moats”—durable competitive advantages that protect businesses from rivals. TSMC exemplified this principle perfectly. Its advanced manufacturing capabilities, technological superiority, and customer relationships created formidable barriers to entry that competitors struggled to overcome.

Corporate trust and integrity. The fourth principle emphasizes investing in companies with experienced management teams and products that generate customer trust. This intangible asset, while difficult to quantify, directly influences long-term business durability.

Disciplined capital allocation. The fifth principle highlights the importance of companies that return capital to shareholders through dividends and repurchases, reinforcing the incentive structure for patient, long-term investing.

All of these principles seemed evident in the TSMC position. Yet Buffett abandoned the most crucial one—long-term ownership—in less than a year.

A $16 Billion Wake-Up Call: Why Even Legends Break Their Own Rules

The timing of Buffett’s exit, viewed through the lens of hindsight, appears nearly catastrophic. The artificial intelligence boom that followed was even more dramatic than observers anticipated. Nvidia’s AI chips faced insatiable demand, creating substantial backlogs that forced TSMC to aggressively expand its monthly capacity for advanced packaging. The company’s growth trajectory accelerated dramatically, and its stock price reflected this expanding opportunity.

By July 2025, Taiwan Semiconductor Manufacturing joined the exclusive trillion-dollar market cap club. Had Berkshire Hathaway maintained its original 60 million share position without liquidating a single share, that stake would have appreciated to approximately $20 billion by late January 2026. Instead, the decision to exit cost the company roughly $16 billion in unrealized gains—a staggering sum even by Berkshire’s standards.

This outcome highlights a critical tension in investment decision-making: geopolitical risk analysis versus secular trend conviction. Buffett’s concern about Taiwan’s precarious location wasn’t irrational. However, it caused him to exit a position precisely when the fundamental thesis was strengthening, not weakening. The company’s dominance in AI chip manufacturing actually provided more strategic importance to both the United States government and its allied customers—a development that probably reduced, rather than increased, geopolitical risk to the business.

What Becoming Warren Buffett’s Successor Means for Berkshire

This $16 billion lesson carries profound implications for Greg Abel, who has assumed the CEO role following Buffett’s retirement. While this mistake demonstrates that even investing legends remain fallible, it simultaneously reinforces the wisdom of Buffett’s core framework. Rather than signaling that his principles were flawed, this misstep demonstrates what happens when those principles aren’t applied consistently.

The path forward for Berkshire under Abel likely involves recommitting to the discipline that generated those legendary 6,100,000% cumulative returns over six decades. Becoming warren buffett isn’t about perfect decision-making—it’s about maintaining intellectual humility, respecting long-term ownership periods, and recognizing when geopolitical concerns might be secondary to fundamental business quality.

For individual investors watching this unfold, the lesson is equally clear. The foundation of wealth accumulation remains unchanged: buy quality businesses at fair prices, hold them through market cycles, and avoid the temptation to trade based on short-term concerns. Even the world’s greatest investor has discovered that departing from these principles, however briefly, carries consequences measured in the billions.