Stocks suffer from VIA suit worries

Taiwan's key stock index posted its biggest drop in two weeks, led by VIA Technologies Inc (威盛電子) on concern the company may lose a lawsuit filed by Intel Corp last week alleging patent violations.

The TWSE Index dropped 112.17, or 2.6 percent, to 4176.93, its biggest one-day percentage drop since Aug. 24. Five stocks fell for every one that rose. The total value of trade today was NT$32.67 billion (US$942 million), up from NT$27 billion yesterday, though more than 50 percent below this year's average daily trade.

"Clearly Intel is determined to stop what it sees as patent violations and is not prepared to allow VIA an easy ride to dominance as happened in 1999," said Ben Akrigg, who helps manage about US$2.5 billion in Asian stocks outside of Japan at Morley Fund Management in Singapore.

Stocks also fell after two US Federal Reserve Bank presidents said the US economy is likely to recover at a slower rate than anticipated. The US is Taiwan's biggest export market, buying more than a fifth of the nation's exports.

VIA Technologies dropped NT$7, or 6.9 percent, to NT$94, down 55 percent in the last six months. There is concern the chipset seller may lose a lawsuit Intel Corp filed in a US court last week. Intel said VIA infringed its Pentium 4 microprocessor patents.

Cathay Life Insurance Ltd (國泰人壽) fell NT$1, or 2.5 percent, to NT$39.30. ING Barings Securities cut its recommendation on Taiwan's biggest life insurer to "hold" from "buy" because the stock's 45 percent gained since Aug. 1 is overdone.

Computer parts makers declined on concern demand remains muted for their products because of slow global growth, high inventories and a drop in spending by companies and customers.

International Data Corp said last week computer shipments will fall this year by 1.6 percent from last year.

Acer Inc (宏電), a computer maker, fell NT$0.90, or 6.7 percent, to NT$12.55. Asustek Computer Inc (華碩電腦), Taiwan's biggest motherboard maker, fell NT$2, or 1.5 percent, to NT$130. Compal Electronics Inc (仁寶電腦), a notebook computer maker, fell NT$0.10, or 0.3 percent, to NT$32.40. Hon Hai Precision Industry Ltd (鴻海精密), which makes everything in a computer except chips, fell NT$0.50, or 0.4 percent, to NT$112.50. Quanta Computer Inc (廣達電腦), Taiwan's biggest notebook computer maker, fell NT$2.50, or 3.1 percent, to NT$77. Yageo Corp (國巨), the biggest maker of parts that control the flow of electricity in computer and mobile phone circuits, fell NT$1.50, or 6.6 percent, to NT$21.30.

Chipmakers fell after the widely watched Philadelphia Stock Exchange Semiconductor Index, a price-weighted index of 16 companies involved in the design and manufacture of chips, fell 0.9 percent yesterday and is down 12 percent this year.