Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares fell the most in three months yesterday upon trading resumption, joining a global technology rout as investors dramatically soured on the promises of artificial intelligence (AI).
The shares declined 5.62 percent to close at NT$924 in Taipei, dragging down the benchmark TAIEX, which fell 3.29 percent to 22,119.21 points amid a technical correction, Taiwan Stock Exchange data showed.
Other chip stocks also fell, with ASE Technology Holding Co (日月光投控) plunging 9.86 percent, MediaTek Inc (聯發科) dropping 2.35 percent, Realtek Semiconductor Corp (瑞昱) falling 1.33 percent and United Microelectronics Corp (聯電) retreating 1.17 percent, while Apple Inc manufacturing partner Hon Hai Precision Industry Co (鴻海精密) slumped 4.71 percent.
Photo: CNA
Local markets reopened after a two-day closure due to Typhoon Gaemi.
Lackluster earnings from US technology firms have set off a reckoning on the AI hype.
The latest technology rout adds further pressure on TSMC, whose record-breaking rally has been faltering since the middle of this month. A favored AI play due to its cutting-edge chips and stellar earnings, concern over a pricey valuation and the risk of tighter US curbs on chip sales to China have poured cold water on the bullish momentum.
The rotation out of valuation-stretched technology names has been “exacerbated by weak results from ‘Magnificent Seven’ titans Alphabet Inc and Tesla Inc, and some negative news flow on China tariffs,” Union Bancaire Privee SA managing director Ling Vey-sern (凌煒森) said. “Whether the tech sell-off will continue will depend on key results next week which will see four of the Magnificent Seven stocks report,” such as Apple and Amazon.com Inc.
TSMC shares have now fallen more than 14 percent from their peak. The decline spells trouble for the local financial market given the stock accounts for more than one-third of TAIEX’s weighting.
The change of fortunes for Taiwan’s shares has been swift. Earlier this year, surging interest in AI shares had triggered an unprecedented investment boom. The rally led to retail investors piling into exchange-traded funds, and prompted local regulators to warn over herding behavior.
TSMC’s drop could be due to profit-taking, while “whispers of a potential slowdown in the AI investment boom might also be at play,” Straits Investment Management Pte Ltd chief executive officer Manish Bhargava said. “The wider context of AI momentum can’t be dismissed. The burning question is — is the AI rally running out of steam?”
A TSMC spokesperson said there had been no impact from the typhoon as of Thursday.
Taiwan’s US$2.5 trillion stock market was shut on Wednesday and Thursday as Typhoon Gaemi approached after inundating the Philippines. The last time that Taipei was shut for two days in a row for a typhoon was in 2016.
The New Taiwan dollar gained as much as 0.2 percent against the greenback yesterday, before trading little changed and closing at NT$32.831 per US dollar. Earlier this month, the Taiwanese currency fell to its weakest level since 2016 amid intensified outflows from local equities.
Additional reporting by staff writer
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
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PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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