Taiwan Stock Market Plunges Over 1,800 Points on AI Stock Sell-Off, Falls Below 42,000 Index Level

On May 28, Taiwan's stock market sharply declined amid rising skepticism over the high valuations of AI-related stocks and weak performance in U.S. tech stocks ahead of earnings announcements. The American Depositary Receipts (ADRs) of Taiwan Semiconductor Manufacturing Company (TSMC) dropped 1.1%, and Asian markets opened sharply lower. South Korea's KOSPI plunged over 8%, triggering a circuit breaker, which led the Taiwan Weighted Index to crash over 1,819 points at the opening—marking the sixth-largest intraday drop in history—and briefly fall below the 42,000-point threshold. Major electronics and heavyweight stocks tumbled across the board, while only food and consumer staples and air transportation stocks showed relative strength. The index temporarily stood at 41,877 points, down 1,750 points or 4.1%, with estimated daily trading volume reaching TWD 1 trillion.

Among key heavyweight stocks, TSMC (2330-TW) opened lower and continued to decline, dropping as much as 3.4% to NT$2,270. Yageo Corporation (2327-TW), which is scheduled to hold its earnings call this week, plunged to the daily trading limit, breaking below the NT$600 threshold. United Microelectronics Corporation (UMC, 2303-TW) hit the limit-down, MediaTek (2454-TW) fell over 9%, and Delta Electronics (2308-TW) dropped 9%. Other notable declines included Advanced Semiconductor Engineering (ASE, 2311-TW), TPK Holding (2383-TW), and Unimicron (3037-TW), all down 8–9%.

Food-related stocks, less exposed to exports and tech sector volatility, performed relatively well. Homya (1236-TW) rose over 1%, while Taiwan Tobacco & Liquor (1731-TW), Uni-President (1216-TW), Uni-President China (1231-TW), and Black Pine (1234-TW) briefly turned positive.

Airline and transportation stocks benefited from the summer travel season and easing Middle East tensions, which led to lower oil prices. China Airlines (2610-TW) rose 4%, EVA Airways (2618-TW) gained 1.59%, and both Han Hsiang Aviation (2632-TW) and Starlux Airlines (2646-TW) opened in positive territory.

Institutional investors noted that the short-term moving average structure of the Taiwan stock market remains bearish, with technical indicators suggesting a weak consolidation phase. Investors are advised to consider short-term tactical trades based on technical analysis while strictly managing risks through stop-loss and profit-taking strategies. Key sectors to monitor include optical communications, optical lenses, memory chips, aviation, and biotechnology.

Overnight in the U.S., the Dow Jones Industrial Average rose 262.83 points (0.51%) to close at 52,210.08. The Nasdaq Composite fell 43.74 points (0.18%) to 24,932.08, the S&P 500 edged up 1.2 points (0.02%) to 7,413.18, and the Philadelphia Semiconductor Index dropped 264.01 points (2.23%) to 11,554.88.