Taipei: Shares in Taiwan posted the third largest single-session point decline Tuesday as tech stocks took a beating amid lingering concerns over massive spending on AI development that may not deliver comparable returns, dealers said. The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 2,030.83 points, or 4.65 percent, at 41,603.36. This decline is only surpassed by falls of 2,953.71 points on July 17 and 2,065.87 points on April 7, 2025, in the Taiex's history. Turnover totaled NT$809.48 billion (US$25.04 billion).
According to Focus Taiwan, the index faced pressure soon after the market opened as investors witnessed losses posted by tech stocks in the United States overnight. Mega International Investment Services analyst Alex Huang noted that the situation worsened as memory chip suppliers in South Korea tumbled, triggering a sell-off among local semiconductor stocks.
"Market sentiment was badly hurt by fears that large AI investments by cloud service providers will not generate adequate sales...Turnover stayed limited, indicating many investors were reluctant to buy on the dip, fearing more volatility," Huang said. Affected by steep declines in the shares of Korean memory chip suppliers Samsung Electronics Co. and SK Hynix Inc., Taiwan's Nanya Technology Corp. and Winbond Electronics Corp. fell 10 percent, the maximum daily decline, to close at NT$392.50 and NT$144.00, respectively.
Selling spread to other semiconductor stocks. Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for over 40 percent of total market value, lost 2.98 percent to end at NT$2,280.00, contributing about 560 points to the Taiex's decline. United Microelectronics Corp., a smaller contract chipmaker, plunged by the maximum 10 percent to close at NT$113.50, and smartphone IC designer MediaTek Inc. also plummeted 10 percent to end at NT$3,315.00.
Outside the chip industry, Yageo Corp., the world's third largest multi-layer ceramic capacitor maker, lost 10 percent to close at NT$563.00, and iPhone assembler and AI server producer Hon Hai Precision Industry Co. (Foxconn) ended down 5.93 percent at NT$238.00. "The silver lining was that funds rotated to select defensive stocks, including telecom services providers," Huang said. Chunghwa Telecom Co. rose 0.36 percent to close at NT$141.00, and Taiwan Mobile Co. ended up 0.44 percent at NT$114.00.
Also seen as safe havens, China Airlines rose 2.35 percent to close at NT$21.75 and EVA Airways gained 1.91 percent to end at NT$42.75 on summer peak season effects. Meanwhile, food brand Uni-President Enterprises Corp. rose 0.39 percent to close at NT$77.40 and rival Ve Wong Corp. rose 2.01 percent to end at NT$48.15. In the financial sector, Fubon Financial Holding Co. lost 3.46 percent to close at NT$125.50, but Mega Financial Holding Co. rose 0.10 percent to end at NT$49.45 on its relatively low valuation.
"Investors should keep a close eye on results from other major U.S. cloud service providers due later this week after Alphabet (Google's parent) reported last week that its cash flows turned negative," Huang said, referring to Meta and Microsoft (Thursday) and Amazon (Friday). According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$87.56 billion in shares on the market Tuesday.