【Massive Drop Analysis】Taiwan Stocks Plunge 2,000 Points: Decoding 3 Shockwaves【Memory】 Can It Be Saved? Which Group to Target?

Taiwan's stock market experienced a significant drop, with the weighted index falling by 2030.83 points to close at 41603.36, and a turnover of 8094.82 billion.

Observing the movements of the three major institutional investors today, foreign investors sold 875.62 billion, investment trusts bought 23.53 billion, and proprietary traders sold 317.29 billion. The three major institutional investors collectively sold 1169.39 billion, with foreign investors switching from buying to selling, proprietary traders selling for three consecutive days, and investment trusts buying for twenty-five consecutive days, totaling 2458.23 billion in net buying.

International oil prices have significantly dropped, easing market concerns about inflation and the Federal Reserve's interest rate hikes. U.S. stocks on Tuesday showed a mixed performance, with the Dow Jones Industrial Average rising by 0.51%, and the S&P 500 Index slightly higher. However, tech stocks and the semiconductor sector faced selling pressure, with the Philadelphia Semiconductor Index falling by 2.23%, and the Nasdaq Index dropping by 0.18%, marking the fourth consecutive trading day of decline. Initially, the market was briefly stimulated by news of a temporary halt in military conflict between the U.S. and Iran, leading to a rally in the four major indices. However, as the market's focus shifted back to the Federal Reserve's interest rate decision and corporate earnings, selling pressure on tech stocks gradually intensified, and market watchfulness increased. Currently, the market generally expects a 62% probability that the Federal Reserve will keep interest rates unchanged at its upcoming FOMC meeting. Investors are also awaiting Chairman Powell's latest views on the timing of future rate cuts. In the semiconductor sector, China's memory giant ChangXin Storage saw its stock price surge by 466% on its first day of listing in Shanghai. Additionally, there are reports that China has successfully developed immersion deep ultraviolet (DUV) lithography machines, potentially breaking the long-term technological advantage of Dutch equipment giant ASML. This has triggered a comprehensive correction in the global semiconductor equipment and AI chip sectors. ASML (ASML-US) dropped by 5.80%, NVIDIA (NVDA-US) fell by 4.99%, and the market is also watching reports that it plans to provide up to $250 billion in financing to OpenAI, raising concerns about the financial risks of large-scale unsecured investments. Meanwhile, Micron (MU-US) closed down by 2.25%, SK Hynix (SKHY-US) ADR plummeted by 7.47%, and SanDisk (SNDK-US) saw a drop of 11%, indicating that the market's evaluation of the semiconductor competition landscape and AI sector has turned more conservative.

In Taiwan, influenced by the correction in U.S. tech stocks, the weighted index fell by 2030.83 points to close at 41603.36, with a turnover of 8094.82 billion. Market panic quickly escalated, with the memory sector being the hardest hit. Hua Bang Electric (2344-TW), South Asia Science (2408-TW), and Nan Ya PCB (2337-TW) all hit limit-down. This correction was primarily driven by three major negative factors: NVIDIA's reported plan to provide a $600 billion financing scheme to help OpenAI purchase AI chips, raising market concerns about AI industry financing models and credit risks, which dragged down NVIDIA's stock price and also put pressure on global AI concept stocks. On the other hand, the listing of China's memory giant ChangXin Storage led to a significant increase in its market value, causing market concerns about intensified competition in the memory industry and a more conservative approach to capital. Additionally, reports that China has begun mass-producing its independently developed immersion DUV lithography machines have stimulated the theme of semiconductor equipment autonomy. Although the market believes that it is still difficult to challenge ASML's leading position in the short term, the news still impacted the performance of the semiconductor equipment sector. The simultaneous occurrence of these three negative factors led to a comprehensive decline in Asian and Taiwanese stocks today.

However, from a fundamental perspective, Taiwan's economy still has considerable resilience. The National Development Council's latest economic indicator has been red for seven consecutive months, reflecting the continued vibrancy of exports, investment, and manufacturing. The downstream electronics procurement season in the second half of the year has officially begun, and with the demand for AI servers, high-performance computing, and advanced processes, the growth momentum of exports is expected to continue, which will also help support corporate earnings performance. In terms of capital flows, listed and over-the-counter financing have decreased by a total of 185.67 billion (listed financing has decreased by 141.67 billion over three consecutive days, and over-the-counter financing has decreased by 44 billion over two consecutive days), which is expected to show a rebound signal in the future. Taiwan's economic indicator is hot and red for seven consecutive red lights. The National Development Council stated that the export momentum will continue during the downstream electronics procurement season in the second half of the year.

Overall, U.S. stocks are facing interference from multiple factors in the short term, including the Federal Reserve's decision, corporate earnings, and the development of China's semiconductor technology, making market volatility inevitable. However, while Taiwan's stock market has experienced fluctuations due to profit-taking and capital adjustments in recent periods, there are no obvious signs of weakening in the overall fundamentals. As the financing balance continues to decrease, the market float is gradually being cleansed, and the capital structure is becoming healthier, which helps capital to refocus on industries with growth potential. Therefore, the market sentiment remains volatile. Looking ahead, AI remains the core driver of global technology industry growth, with cloud service providers continuing to expand their capital expenditures. The demand for AI servers, semiconductors, high-speed transmission, and advanced packaging is expected to continue into next year. The profit prospects for related supply chains remain optimistic. Investors can continue to focus on AI semiconductors, heat dissipation, power management, PCB, ABF substrates, CPO optical communications, semiconductor equipment, and high-speed network communications, and adopt a strategy of phased deployment and buying on dips. They should retain some cash to increase capital flexibility, avoid chasing highs and selling lows, and wait for market sentiment to stabilize. In the fourth quarter, driven by corporate earnings growth and capital inflows, the medium-to-long-term bullish trend of Taiwan's stock market is still worth expecting. Additionally, this week marks the start of the super earnings season, with cloud service leaders such as Microsoft (MSFT-US), Meta (META-US), Apple (AAPL-US), and Amazon (AMZN-US) set to release their earnings. Their capital expenditures and AI investment scale will be key indicators for the market to assess the sustainability of AI industry growth.

In terms of large-cap stocks, TSMC (2330-TW) fell by 2.98%, closing at 2280. There are reports that it will raise wafer foundry prices, with a 5% to 10% increase for advanced processes below 7 nanometers, and a possible additional 10% to 15% for HPC high-performance computing orders. There is also room for price adjustments in mature processes. This price increase reflects TSMC's gradual enhancement of market pricing power, leveraging its technological leadership, supply scarcity, and high delivery capability. With the increase in overseas expansion, equipment, manpower, and depreciation costs, price adjustments help maintain profitability levels. Looking ahead to 2026-2027, as AI evolves from Generative AI to Agentic AI, computational demand will continue to rise, coupled with the growth of advanced processes and HPC demand, we remain optimistic about TSMC's long-term operational momentum.

Foxconn (2317-TW) fell by 5.93%, closing at 238. The Wall Street Journal reported that NVIDIA plans to provide OpenAI with up to $250 billion in financing guarantees to help lease a super-large data center under construction by SoftBank in Ohio, USA. The overall AI infrastructure investment scale is expected to exceed $5,000 billion, becoming the largest AI data center project in the world. The market is optimistic that Foxconn, as an important partner of OpenAI and SoftBank, is expected to benefit from the significant growth in demand for AI servers, racks, and data center hardware, becoming a major supplier. However, NVIDIA's simultaneous assumption of financing guarantees has also raised market concerns about the circular financing and credit risks of the AI industry. If future AI investments slow down, related companies may face greater financial pressure.

MediaTek (2317-TW) fell by 9.92%, closing at 3315. The 2026 Q2 operating outlook shows weak demand for smartphones, but the cloud AI ASIC business is growing rapidly, with Q3 expected to be a key turning point for transformation. Starting from Q4, TPU chip revenue is expected to see strong growth, accounting for more than half of the company's revenue by the end of 2027. Affected by the weak Chinese smartphone market, Q3 revenue is expected to decrease by about 5%, with a gross margin maintained at 45% to 46%. The market is focused on the upcoming earnings call, with key points including the 2027 TPU revenue guidance. Analysts expect MediaTek's AI ASIC market share to improve, and if the global billion-dollar market is considered, long-term AI business will become a major growth engine. Additionally, the progress of 2nm TPU mass production, CoWoS layout, and the competitive landscape of next-generation AI chips will also be market watchpoints.

In terms of strong sectors, NVIDIA is expanding its GPU layout, sending Jetson chips to the moon to assist in lunar exploration missions with related equipment. Partner Lunar Outpost stated that if the chips can operate stably in the lunar environment, future lunar rovers could have stronger capabilities.