The Warren Buffett News That Shook Berkshire: How a $16 Billion Investment Misstep Broke His Most Sacred Rules

When Warren Buffett stepped down as Berkshire Hathaway’s CEO at the start of 2026, he left behind a legacy few could rival. Under his decades-long stewardship, the company’s Class A shares achieved an astounding cumulative return of nearly 6,100,000%. Yet beneath this monumental success lies an uncomfortable truth: Buffett himself violated the very principles that built this empire, and the cost has been staggering.

The story centers on a rare moment in recent Buffett news when the investing legend departed dramatically from his own rulebook. In the third quarter of 2022, Buffett authorized a $4.12 billion investment in Taiwan Semiconductor Manufacturing (TSMC), acquiring 60,060,880 shares of the chip fabricator. By January 2026, this position would have appreciated to nearly $20 billion had Berkshire maintained its stake. Instead, the company’s complete exit—beginning just months after purchase—has resulted in an estimated $16 billion loss compared to current valuations. It’s a cautionary tale that reveals even the most disciplined investors can stumble when facing unprecedented market conditions.

The Cornerstones of Buffett’s Investing Philosophy

Before understanding what went wrong, it’s essential to recognize what went right. Buffett’s investing framework rested on several non-negotiable principles that guided Berkshire through multiple market cycles.

His first cornerstone was an unwavering commitment to long-term ownership. Buffett didn’t view stock purchases as trading opportunities measured in months or quarters. Instead, he approached every investment with a multi-decade horizon, trusting that well-selected businesses would compound wealth through boom-and-bust cycles. This patience allowed him to ride out inevitable market downturns without panic.

Buffett was also fanatical about value. He famously distinguished between a “wonderful business at a fair price” and a “mediocre business at a cheap price,” always preferring the former. When markets became overheated and valuations spiraled, he sat patiently, waiting for price dislocations to emerge. This contrarian discipline protected Berkshire during irrational exuberance while positioning it to capitalize when opportunity appeared.

The third pillar involved seeking competitive advantages and durable moats. Buffett gravitated toward market leaders whose advantages would sustain them for years or decades. He understood that competition, technology shifts, and disruption could erode even the strongest positions, so he demanded evidence of genuine, defensible superiority.

Finally, Buffett championed strong corporate governance and management integrity. He wanted to partner with executives whose companies earned customer trust—an asset that takes years to build but seconds to destroy. This philosophy extended to capital allocation; he favored firms that returned excess cash through dividends and buybacks, signaling confidence in long-term growth.

Breaking the Long-Term Rule: The TSMC Gambit Gone Wrong

Ironically, TSMC appeared to tick every box on Buffett’s checklist in mid-2022. The company held an unassailable position as the world’s dominant chip foundry, producing the majority of advanced semiconductors for Apple, Nvidia, Broadcom, Intel, and Advanced Micro Devices. It possessed genuine competitive moats, proven management, and a fortress balance sheet.

The timing also seemed strategic. The 2022 bear market had created genuine price dislocations, offering an entry point at attractive valuations. More compellingly, TSMC was positioned at the epicenter of the artificial intelligence revolution. Its proprietary chip-on-wafer-on-substrate (CoWoS) technology stacked graphics processing units with high-bandwidth memory—the exact architecture demanded by the exploding AI data center market. For an investor like Buffett, this convergence of value and growth should have been irresistible.

Yet by Q4 2022, just three months after the initial investment, Berkshire reversed course. SEC filings show the company liquidated 86% of its TSMC holdings in the final quarter of 2022, then completely exited during Q1 2023. The entire position lasted barely nine months—a stark departure from Buffett’s traditional decades-long holding periods.

When questioned by Wall Street analysts in May 2023, Buffett offered a brief explanation: “I don’t like its location, and I’ve reevaluated that.” His comment appeared to reference the CHIPS and Science Act, legislation signed by President Joe Biden in August 2022 aimed at boosting domestic U.S. semiconductor manufacturing. Following the act’s passage, the Biden administration began imposing restrictions on exports of high-performance AI chips to China, raising concerns about Taiwan’s geopolitical vulnerability and potential future constraints on TSMC’s business.

It was, in retrospect, a reasonable concern. Yet Buffett’s timing to act on that concern could hardly have been worse.

The AI Boom Buffett Failed to Anticipate

What Buffett seemingly underestimated was the ferocity and scale of the artificial intelligence buildout that would accelerate throughout 2023 and 2024. Demand for Nvidia’s GPUs exceeded even the semiconductor industry’s most bullish forecasts. Backlogs extended for quarters. Companies desperate to secure AI infrastructure were willing to pay premium prices and wait extended periods for allocation.

TSMC, as the exclusive manufacturer of Nvidia’s most advanced chips, found itself at the nexus of this unprecedented demand surge. The company aggressively expanded its monthly CoWoS wafer production capacity, and profitability soared. TSMC’s stock, in turn, experienced explosive appreciation.

By July 2025—roughly 2.5 years after Buffett’s exit—Taiwan Semiconductor joined the exclusive trillion-dollar market cap club. The stock’s appreciation from Buffett’s entry price to that milestone was extraordinary. Had Berkshire maintained even its original stake without adding additional shares, the position would have grown to approximately $20 billion in value. Instead, Berkshire locked in a paper loss of roughly $16 billion relative to what it would have owned.

For a company that prided itself on long-term thinking, the decision to exit TSMC during the earliest phases of the AI revolution represented an acute departure from Buffett’s core methodology. It wasn’t a bad company with a bad outcome. It was a good company with questionable geopolitical timing concerns that, while understandable, proved to be premature.

The Lesson for Berkshire’s New Leadership

As Greg Abel assumes the full weight of Berkshire Hathaway’s leadership, the TSMC episode serves as a sobering reminder. Even legendary investors can misjudge markets and abandon their principles under pressure. The difference is that Buffett’s long track record suggests these lapses are exceedingly rare.

The most prudent path forward for Abel and Berkshire is to remain faithful to the investing principles that generated those 6,100,000% cumulative returns. Long-term thinking, disciplined valuation, the pursuit of competitive advantages, and management integrity remain as relevant in 2026 as they were in the 1960s. If anything, the TSMC mistake reinforces that straying from these moorings—even with reasonable justifications—can prove extraordinarily expensive.

The $16 billion question now looming over Berkshire isn’t just financial. It’s whether investors can learn from Buffett’s rare misstep and recommit to the patience and principles that made him legendary.