Taiwan stocks fell 0.51 percent on Friday because of uncertain tech demand in the second half and lingering domestic political woes, erasing some of the previous session's sharp gains.
The main TAIEX share index fell as much as 1.9 percent by midday before late buying kicked in. It ended down 32.84 points at 6,452.31, with turnover was flat with Thursday at T$77.54 billion ($2.37 billion).
"We are still worried about demand in the third quarter even though demand usually picks up at that time," said Chiang Chen-sheng, manager at MasterLink Investment Advisory.
LCD maker AU Optronics Corp shed 2.01 percent and smaller rival Chi Mei Optoelectronics Corp lost 1.42 percent after a local media report that Chi Mei had slowed expansion amid fears over a glut.
On the political front, opposition parties are trying to oust President Chen Shui-bian over a series of scandals involving members of his family and former aides.
The electronics sub-index dropped 0.52 percent and the financial sector, whose weighting is second only to techs in Taiwan's stock market, was off 0.90 percent.
Among other major losers, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) fell 1.91 percent. But analysts say the world's top contract chip maker is a long-term buy, based on its solid fundamentals.
TSMC is taking a front seat in driving advanced process technology to reduce costs when new portable consumer devices gain popularity.
Hon Hai Precision Industry Co, a major exporter of electronics components, followed losses in US technology shares on Thursday. The stock fell 0.76 percent.
But Compal Communications Inc surged the daily 7 percent limit. The Economic Daily News reported that it had received orders from Motorola Inc to make new mobile phones for the world's second-largest cellphone maker.
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