Taiwan stocks fell, led by computer parts makers such as Hon Hai Precision Industry Ltd (鴻海精密), on concern Hewlett-Packard Co's acquisition of Compaq Computer Corp may reduce orders and prices for suppliers.
"It does seem certain that the pricing power of H-P over its sub-suppliers will strengthen and that'll put pressure on the entire supply chain," said Emil Wolter, who helps manage about US$2 billion in global emerging markets at Pictet Asset Management Ltd in London.
The TWSE Index dropped 68.62, or 1.5 percent, to 4424.91, after falling as low as 1.8 percent and rising as much as 0.4 percent. Within the index, 307 stocks fell and 136 rose.
The total value of trade was NT$43.55 billion (US$1.26 billion), down from NT$51.16 billion yesterday.
Computer parts makers declined on concern Hewlett-Packard's acquisition of Compaq may cause the company to reduce its supply costs, lowering orders for some Taiwanese companies.
"If cost cutting is really the key motivation, then this clearly bodes bad for average selling prices and potentially margins for many of the listed players in Taiwan," Wolter said.
Investors also said there is little prospect of a pick-up in demand for computer-related products while economic growth remains depressed as companies and individuals continue to cut their spending on technology.
Asustek Computer Inc (華碩電腦), a motherboard and notebook computer maker and a Hewlett-Packard supplier, fell NT$1, or 0.7 percent, to NT$134.50. Hon Hai Precision, which makes everything in a computer except chips and supplies Compaq, fell NT$5, or 4.1 percent, to NT$118.50. Arima Computer, a notebook computer maker and a Compaq supplier, fell NT$1.10, or 6.8 percent, to NT$15.10.
Inventec Ltd (英業達), a computer maker and a Compaq supplier, fell NT$1.50, or 6.9 percent, to NT$20.30. Quanta Computer Inc (廣達電腦), a notebook computer maker and a Hewlett-Packard supplier, fell NT$0.50, or 0.6 percent, to NT$81.50.
Chipmakers dropped after the Semiconductor Industry Association said worldwide sales of semiconductors fell 37 percent in July from a year earlier as demand for chips used in products from personal computers to mobile phones dropped. Sales in July fell to US$10.9 billion from US$17.3 billion a year ago, said the industry group, whose 140 members produce more than 90 percent of the semiconductors in the US.
Taiwan Semiconductor Man-ufacturing Co (TSMC, 台積電) fell NT$0.50, or 0.8 percent, to NT$65.50. TSMC's American depositary receipts fell US$0.23, or 1.8 percent, to US$12.75. TSMC Chairman Morris Chang (張忠謀) said chip demand this year may shrink by as much as 30 percent from last year. Chang said it will take three years for the industry to recover.
United Microelectronics Corp (UMC, 聯電), the second-biggest made-to-order chipmaker, fell NT$o.30 or 0.7 percent, to NT$40. UMC's ADRs fell US$0.01, or 0.1 percent, to US$7.48.
Mosel Vitelic Inc (茂矽電子) fell 20 NT cents, or 1.8 percent, to NT$11.10. Nanya Technology Corp (南亞科技) fell NT$1.10, or 6.8 percent, to NT$15.10.
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