Taiwan shares extend losses amid concerns over AI investments

Taipei, Feb. 25 (CNA) Shares in Taiwan extended their losses from a session earlier to close down by more than 270 points Tuesday, with the sell-off sparked by fears over future investments in artificial intelligence development, after Microsoft reportedly cancelled some leases for data center capacity, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 279.59 points, or 1.19 percent, at 23,285.72, after moving between 23,209.53 and 23,376.42. Turnover totaled NT$392.17 billion (US$11.96 billion).

The market opened down 0.80 percent and selling escalated with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in focus as investors took their cue from a 2.59 percent plunge on the Philadelphia Semiconductor Index and a 1.21 percent drop on the tech-heavy Nasdaq index overnight following the Microsoft reports, dealers said.

After its American depositary receipts (ADRs) fell 3.32 percent overnight, TSMC, the most heavily weighted stock in Taiwan, lost 1.86 percent to close at NT$1,055.00 and its losses contributed about 160 points to the Taiex's decline, sending the electronics index and the semiconductor sub-index lower by 1.62 percent and 1.55 percent, respectively.

"The Microsoft reports triggered concerns over a possible AI growth slowdown in the future after recent massive investments," according to Concord Capital Management analyst Lu Chin-wei. "That's why semiconductor stocks in the United States got hard hit and their Taiwanese counterparts just followed suit."

"Investors rushed to cut their TSMC holdings as the company also faces uncertainty created by a tariff war launched by the Trump administration. The stock fell below the nearest technical support of NT$1,080.00, the 60-day moving average, and became technically weaker," Lu said.

Among other semiconductor stocks, application specific integrated circuit (ASIC) designer Alchip Technologies Ltd. shed 4.06 percent to end at NT$3,305.00, and United Microelectronics Corp., a smaller contract chipmaker, dropped 0.57 percent to close at NT$43.30. Bucking the downturn, smartphone IC designer MediaTek Inc. ended up 0.32 percent at NT$1,550.00.

In the wake of a 3.09 percent fall suffered by U.S.-based AI chip designer Nvidia Corp. overnight, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, shed 3.53 percent to close at NT$177.50, and rival Quanta Computer Inc. lost 3.96 percent to end at NT$254.50.

Wistron Corp., another AI server supplier, lost 2.61 percent to close at NT$112.00, and AI graphics card vendor Giga-Byte Technology Co. dropped 1.51 percent to end at NT$261.50.

"Fortunately, select old economy heavyweights remained resilient as they attracted buying rotated out of TSMC shares. Their gains helped the Taiex from falling further," Lu said. "But, I prefer to say their gains were technical in nature on low valuations."

In the petrochemical industry, shares in Formosa Chemicals & Fibre Corp. rose 2.69 percent to close at NT$30.55, Formosa Plastics Corp. gained 1.64 percent to end at NT$40.35, Formosa Petrochemical Corp. added 1.63 percent to close at NT$40.45, and Nan Ya Plastics Corp. ended up 0.73 percent at NT$34.50.

Elsewhere in the old economy sector, China Steel Corp., the largest steel maker in Taiwan, rose 3.02 percent to close at NT$23.90, and Ta Chen Stainless Pipe Co. soared 8.43 percent to end at NT$48.25.

In the financial sector, which lost only 0.02 percent, Fubon Financial Holding Co. rose 0.11 percent to close at NT$91.70, while Cathay Financial Holding Co. ended unchanged at NT$68.70.

According to the TWSE, foreign institutional investors sold a net NT$51.34 billion worth of shares on the main board Tuesday.