Shares closed lower yesterday following losses on Wall Street overnight, with memory chip makers leading the fall, analysts said.
The TAIEX finished 96.58 points, or 1.6 percent, lower at 5,879.08.
A modest NT$51.74 billion (US$1.61 billion) worth of shares changed hands.
Decliners far outnumbered advancers 733 to 69, while 90 issues ended the day unchanged.
"Weakness in the US market hurt local sentiment," said Harvey Chang, an analyst at United Securities Investment Trust (統一投信).
But the New Taiwan dollar moved up against its US counterpart Monday, closing NT$0.094 higher at NT$32.028 on the Taipei foreign exchange market.
Memory chip makers led the market's slide, pressured by a 26 percent dive in the share price of US-based Advanced Micro Devices.
Powerchip Semiconductor (力晶), Taiwan's largest maker of dynamic random access memory chips, tumbled 6.6 percent to NT$24.
ProMOS (茂德) dropped 6.3 percent to NT$12.7 and Nanya Technology (南亞) fell 6.8 percent to NT$23.2.
Financial issues also fell, with China Development Financial Holding (中華開發金控) tumbling 4.4 percent to NT$14.2, Shin Kong Financial Holding (新光金控) slipping 1.3 percent to NT$30, and Mega Financial Holding (兆豐金控) finishing 1.9 percent lower at NT$21.
One of the few bright spots yesterday was Taiwan Fertilizer (台肥), which gained 4.9 percent to NT$34.1 after foreign investors bought more than half of the shares in the firm which were sold by the government.