The TAIEX had its biggest drop in four months yesterday. Taiwan Semiconductor Manufacturing Co (TSMC,
Quanta Computer Inc (廣達電腦) fell after saying its gross profit margin, or the percentage of sales left after subtracting production costs, slid to 5.7 percent in the second quarter, from 7.8 percent a year ago, as prices dropped.
"Many investors were overly optimistic about the recovery in the technology sector," said Phil Chen, a fund manager at the Grand Cathay Securities Investment Trust Co (大華投信).
"Persistent overcapacity in computer-related supplies will shatter those hopes," he said.
The TAIEX fell 128.60, or 2.3 percent, to 5,558.25, its biggest drop since April 25. The Taiwan Futures Index for September delivery shed 1.5 percent to 5,580.
TSMC, the world's largest maker of computer chips on a subcontracting basis for clients such as Intel, shed NT$1.50, or 2.3 percent, to NT$63. Rival United Microelectronics Corp (聯電) lost NT$1.10, or 4 percent, to NT$26.10.
Quanta Computer, the nation's largest notebook computer maker, tumbled NT$6, or 6.8 percent, to NT$82.50.
The "profit margin suffered as both Dell Computer Corp and Hewlett-Packard Co demanded Quanta help them lower their costs," said Eddie Chiu, who manages the equivalent of US$116 million for First Global Investment Trust Co's (元大投信) Hitech Fund.
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