Taiwan shares end lower as TSMC extends losses

Taipei, Oct. 23 (CNA) Shares in Taiwan closed lower by more than 200 points Wednesday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) extended losses from a session earlier after international news media reported one of its chips was found in a product of Chinese tech giant Huawei Technologies in possible violation of U.S. export restrictions, dealers said.

Led by TSMC, the bellwether electronics sector moved lower throughout the session, while old economy and financial stocks largely traded in the doldrums, adding pressure to the broader market throughout the session, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 200.67 points, or 0.85 percent, at 23,334.76 after moving between 23,318.84 and 23,486.45. Turnover totaled NT$332.69 billion (US$10.37 billion).

The market opened down 0.57 percent and selling escalated with TSMC in focus, as investors took cues from reports that research firm TechInsights recently discovered a TSMC chip inside Huawei's Ascend 910B, which is considered the Chinese company's most advanced artificial intelligence chip, dealers said.

TSMC's selling spread to many other tech stocks, and along with losses suffered by old economy and financial stocks, the Taiex failed to overcome the stiff technical resistance around the five-day moving average of 23,390 points by the end of the session, dealers added.

After falling 0.92 percent a session earlier, TSMC, the local market's most heavily weighted stock, fell 1.40 percent to close at NT$1,060.00. Its losses contributed about 120 points to the Taiex's decline and sent the electronics index and semiconductor subindex lower by 0.94 percent and 1.27 percent, respectively.

"After TSMC hit a historic intraday high of NT$1,100 on Friday [the day after the chipmaker raised its sales guidance for 2024] the stock has fallen into consolidation mode and become susceptible to any negative leads," Concord Capital Management analyst Lu Chin-wei said.

"Yesterday, the stock was impacted by fears raised by U.S. media reports that if Donald Trump wins the U.S. Presidential vote, Washington could scrap a US$6.6 billion subsidy deal with TSMC," Lu said. "Today, the stock was affected by another report about a possible violation of the U.S. sanctions against Huawei."

In a statement Wednesday, TSMC said it remained committed to complying with all applicable rules and regulations, including export controls, and had not supplied Huawei since mid-September 2020.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. lost 1.52 percent to end at NT$61.50, United Microelectronics Corp., a smaller contract chipmaker, dropped 0.99 percent to close at NT$50.20, and smartphone IC designer MediaTek Inc. ended down 0.76 percent at NT$1,300.00.

iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, rose 0.23 percent to close at NT$216, helping the stock sustain itself above the five-day moving average of NT$211.50, Lu said.

"The silver lining was that Hon Hai stayed resilient as it will start to ship GB200 AI servers powered by Nvidia Corp.'s latest Blackwell graphics processing units (GPUs) later this quarter," Lu said.

However, other AI-related stocks lagged behind Hon Hai. Quanta Computer Inc., another AI server maker, lost 0.63 percent to end at NT$317.00, and rival Wistron Corp. closed unchanged at NT$113.00. However, AI graphics card vendor Giga-Byte Technology Co. rose 0.91 percent to end at NT$276.50.

"Like their tech counterparts, financial and old economy stocks were largely haunted by concerns over the U.S. presidential vote," Lu said.

The financial sector lost 1.04 percent, with Shin Kong Financial Holding Co. down 1.43 percent to close at NT$17.20, Fubon Financial Holding Co. down 1.29 percent to end at NT$92.10, CTBC Financial Holding Co. down 1.23 percent to close at NT$36.15, and Cathay Financial Holding Co. down 0.14 percent to end at NT$69.20.

In the old economy sector, Kindom Development Co. shed 1.48 percent to close at NT$46.50, and King's Town Construction Co. lost 2.08 percent to end at NT$80.20 with the construction index falling 1.11 percent.

Elsewhere in the old economy sector, cooling oil supplier Great Wall Enterprise Co. dropped 1.17 percent to close at NT$50.90, and food brand Uni-President Enterprises Corp. fell 0.79 percent to end at NT$88.10, as the food sector lost 0.66 percent.

Bucking the downturn, computer numerical control (CNC) machinery Anderson Industrial Corp. soared 10 percent, the maximum daily increase, to close at NT$21.90, and Luxe Green Energy Technology Co. rose 0.72 percent to end at NT$21.90.

"The U.S. presidential election is expected to continue to dictate markets at home and abroad. In Taipei, a failure to stand above the five-day moving average has made the main board technically weaker and the impact from the election could become more apparent," Lu said.

"In addition to political factors, investors should pay close attention to the ongoing earnings season, in particular big tech firms, which could move the global markets," he said, referring to companies including electric vehicle brand Tesla and AI chip designer Advanced Micro Devices, Inc (AMD) in the short term.

According to the TWSE, foreign institutional investors sold a net NT$7.89 billion worth of shares on the main board Wednesday.