Taiwan stocks plunge more than 8%

A man checks his smartphone in front of a screen showing stocks index at the Taiwan Stocks Exchange in Taipei on January 21, 2022. (Photo by Sam Yeh / AFP)

Taipei, Taiwan — Taiwan stocks fell more than eight percent Monday after poor US jobs data fuelled recession fears.

The sell-off — mirrored across other Asian markets — followed another hefty day of losses on Wall Street, where heavyweight tech firms including Amazon and Microsoft took the brunt owing to worries an AI-fuelled rally this year may have been overdone.

The Taiex, the weighted index on the Taiwan Stock Exchange, was down 8.35 percent at 19,830.88 by the close of morning trade at 1:30 p.m. (0530 GMT), with chip giant TSMC off 9.3 percent.

READ: Asian stocks tank after US data fans recession fears

The Taiwanese firm controls more than half the world’s output of silicon wafers — considered the lifeblood of the global economy — that are used to power anything from smartphones and cars to missile launch pads and stock markets.

Its major clients include Apple, Nvidia and AMD — California-based firms regarded as the drivers behind the current explosion of generative AI products after the runaway success of ChatGPT.

TSMC had initially benefitted from a rally earlier this year fuelled by a frenzy to snap up firms linked to artificial intelligence.

That helped the company to briefly pass the US$1 trillion market capitalisation mark in July, putting it ahead of Tesla as the seventh most valuable technology firm.

But the AI-fuelled drive has also stoked speculation that valuations for tech stocks are far too high and a correction could be round the corner.

Profits at TSMC jumped more than a third in the second quarter of 2024, while its revenues rose 32 percent on-year to US$20.82 billion.

The company expects its third-quarter revenue to jump to $23.2 billion, above expectations, according to Bloomberg News.