Chip stocks drop on concern demand is continuing to slow

Taiwan stocks fell, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), on concern chip demand is continuing to drop as industry leader Intel Corp is expected to lower its third-quarter sales forecast.

The TWSE Index declined 86.65, or 2 percent, to 4,338.26, after falling as low as 2.5 percent. Eight stocks fell for every one that rose. Trade yesterday totaled NT$36.9 billion ($1.1 billion), down from NT$43.6 billion Wednesday and NT$51.2 billion on Tuesday.

TSMC fell NT$1.50, or 2.3 percent, to NT$64. TSMC's American depositary receipts fell US$0.22, or 1.7 percent, to US$12.53. United Microelectronics Corp (UMC, 聯電), the second-biggest made-to-order chipmaker, fell NT$0.10, or 0.3 percent, to NT$39.90. UMC's ADRs fell US$0.31, or 4.1 percent, to US$7.17.

Computer parts makers declined on concern Hewlett-Packard Co's acquisition of Compaq Computer Corp earlier this week may cause the company to reduce its supply costs, lowering orders for some Taiwanese companies.

Asustek Computer Inc (華碩電腦), a motherboard and notebook computer maker and a Hewlett-Packard supplier, fell NT$4, or 3 percent, to NT$130.50. Arima Computer Corp (華宇電腦), a notebook computer maker and a Compaq supplier, fell NT$1.05 cents, or 7 percent, to NT$14.05.

Hon Hai Precision Industry Ltd (鴻海精密), which makes everything in a computer except chips and supplies Compaq, fell NT$5.50, or 4.6 percent, to NT$113. Inventec Ltd (英業達), a computer maker and a Compaq supplier, fell NT$1.40, or 6.9 percent, to NT$18.90. Quanta Computer Inc (廣達電腦), a notebook computer maker and a Hewlett-Packard supplier, fell NT$3.50, or 4.3 percent, to NT$78.

Some marine transport stocks gained after Taiwan's cabinet approved a proposal that will allow Taiwan vessels to travel directly from Penghu in the Taiwan Strait and China.

Yang Ming Marine Transport (陽明海運) rose NT$0.35, or 4.1 percent, to NT$8.80.