Taiwan stocks fell 0.39 percent from a two-week high on Monday as a warning by tech company Phoenix Precision about a supply glut raised concerns the technology industry's recovery will come later than expected.
Limiting the slide, heavyweight TSMC closed 0.4 percent higher, tracking a rally on Wall Street after US economic data fuelled hopes for an end to interest rate increases in the world's largest economy.
The main TAIEX closed at 6,454.58 points, giving up a 0.74 percent gain at the open. Among the most active, the electronics sub-index sank 0.46 percent while the financial sub-index fell 0.36 percent. "What we have heard from Phoenix and most tech companies is cautious guidance, which is quite disappointing," said Victor Liu, an assistant vice president at Prudential Financial, which manages T$90 billion for clients.
Liu predicted the key index would hover at about 6,500 points through late August, when listed companies are due to report their quarterly results and give guidance for the third quarter.
IC substrate maker Phoenix Precision Technology plunged the daily limit of 7 percent after saying on Friday product prices would fall significantly in the second half of this year as supply outgrows demand. Rival Kinsus Interconnect Technology dropped 4.91 percent. IC substrates are used in mobile phones and PCs. High Tech Computer Corp, the world's top smartphone maker using Windows operating system, was the most actively traded stock by value. It fell 4.84 percent.
Merrill Lynch said it had cut its target price on High Tech to T$878.0 from T$884.0, citing an increase in operating expenses. Memory chip maker ProMOS Technologies jumped 1.22 percent to T$12.45 after United Microelectronics Corp said late last week it had bought a 1.32 percent stake in ProMOS at T$12.04 per share. Shares of UMC, the closest rival of TSMC, ended 0.28 percent higher.