The nation's key stock index fell to a nine-month low, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電), after Goldman, Sachs & Co downgraded the nation's biggest chipmakers.
Goldman Sachs has downgraded the chip sector, saying that business from chip designers has taken longer to recover than some analysts expected.
The TAIEX fell 53.91, or 1.2 percent, to 4534.15, the lowest since Nov. 30. Four stocks fell for every one that rose. The total value of trade was NT$51.67 billion (US$1.51 billion).
TSMC, the world's biggest supplier of chips made to order, dropped NT$0.80, or 1.6 percent, to NT$47.90.
UMC, TSMC's rival, shed NT$0.40, or 1.5 percent, to NT$26.90.
"Over the past month, we have reduced our holdings in these stocks," said Didier Devreese, who helps manage US$950 million in Asian stocks at ING Investment Management Asia-Pacific Singapore Pte.
Stocks also fell after Daniel Niles, a Lehman Brothers Holdings Inc analyst, predicted Intel Corp, the largest semiconductor maker, will trim its third-quarter revenue forecast.
Via Technologies Inc (威盛電子), which is competing with Intel Corp in the computer-processor business, rose NT$1.60, or 3.4 percent, to NT$48.70. Via said it has orders for processors from a US company.
Chunghwa Picture Tubes Ltd (中華映管), Taiwan's second-largest flat-panel display maker, fell NT$1.05, or the 7 percent daily limit, to NT$14.15 after it was sued in the US by LG.Philips LCD Co for violating patents.
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