Taiwan shares tumble over 700 points as TSMC takes a beating

Taipei, Aug. 20 (CNA) Shares in Taiwan moved sharply lower, falling more than 700 points Wednesday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) came under heavy pressure, leading the electronics sector to move lower after a steep drop by tech stocks on U.S. markets overnight, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange, shed 728.06 points, or 2.99 percent, to end at 23,625.44 after fluctuating between 23,620.24 and 24,309.27. Turnover totaled NT$545.96 billion (US$18.03 billion).

It was the first time the Taiex has closed below the 24,000 point mark since Aug. 6, when the index closed at 23,447.36, after the tech-heavy Nasdaq index fell 1.46 percent and the Philadelphia Semiconductor Index lost 1.81 percent Tuesday.

"The big losses among U.S. tech stocks prompted local investors to pocket the gains they recently built with the electronics sector as the top target," Cathay Futures Consultant analyst Tsai Ming-han said.

Before Wednesday, the Taiex had soared 3,006.20 points, or 14.08 percent without any apparent technical pullback since the beginning of June.

"TSMC led the downturn throughout the session," Tsai said. "In addition to profit taking, the losses also reflected uncertainties after the Trump administration was reported as eyeing a stake in the chipmaker."

Reuters report cited unnamed sources as saying the U.S. government wants equity in chipmakers that receive funding under the CHIP Act to build factories in the country, with TSMC as one of them.

TSMC, the most heavily weighted stock in Taiwan, lost 4.22 percent to close at NT$1,135.00. TSMC's losses contributed about 400 points to the Taiex's fall and sent the electronics index lower by 3.75 percent.

TSMC's selling spread to other semiconductor stocks with smartphone IC designer MediaTek Inc. down 2.52 percent to end at NT$1,355.00, and IC packaging and testing services provider ASE Technology Holding Co. falling 2.36 percent at to close at NT$145.00.

Also in the tech sector, iPhone assembler and AI server maker Hon Hai Precision Industry Co. shed 3.61 percent to close at NT$200.50, and Quanta Computer Inc., another AI server supplier, ended down 3.17 percent to end at NT$259.50.

"Today's sell-off was seen across the board as old economy stocks trended lower to add pressure to the Taiex," Tsai said.

Amid lingering concerns over the 20 percent tariff imposed by the United States, machine tool stocks continued to move lower as the levy is higher than the 15 percent faced by major competitor Japan. Hiwin Technologies Corp. lost 4.02 percent to close at NT$203.00, and Tongtai Machine and Tool Co. fell 4.42 percent to end at NT$37.85.

Elsewhere in the old economy sector, Formosa Plastics Corp. lost 2.81 percent to close at NT$38.10, and Nan Ya Plastics Corp. fell 3.32 percent to end at NT$40.75. In addition, Eclat Textile Co. shed 2.46 percent to close at NT$396.00, while rival Far Eastern New Century Corp. ended unchanged at NT$27.70.

In the financial sector, Cathay Financial Holding Co. fell 1.71 percent to close at NT$63.10, and Fubon Financial Holding Co. ended down 1.36 percent at NT$86.90.

"The Taiex could face more losses down the road after today's plunge, but I expect technical support at around the 23,400-23,500 point range with strong global AI demand likely to boost tech stocks," Tsai said.

According to the TWSE, foreign institutional investors sold a net NT$62.62 billion worth of shares on the main board Wednesday.