Taiwan Tech Stocks Take a Hit as Biden Withdraws from U.S. Presidential Race
Taiwanese tech stocks experienced a decline after Joe Biden withdrew from the U.S. presidential race. TSMC, MediaTek, United Microelectronics Corp., and ASE Technology Holding all saw their shares drop. Foxconn, a key player in AI server manufacturing, also faced a significant decline in its stock price.
This latest political development has sent shockwaves through Asia's chip technology economy.
The benchmark Taiex index, which had seen a remarkable 28% increase this year as of July 19, plummeted by almost 700 points, or 3.04%, at one point during trading.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, saw its shares drop by over 3% in Taipei. Similarly, MediaTek, the leading mobile chip developer in terms of shipments, witnessed a decline of more than 5% on Monday morning. United Microelectronics Corp., Taiwan's second-largest contract chipmaker, also experienced a dip of over 3% in its shares. Additionally, ASE Technology Holding, the world's largest chip packaging and testing provider, saw its shares slump by more than 4%.
The stock price of Foxconn, a key player in AI server manufacturing for Nvidia, plunged by nearly 6% to below NT$200 on Monday morning. Foxconn, under the leadership of former Chairman Terry Gou, had previously announced plans to invest $10 billion in Wisconsin to establish a cutting-edge display manufacturing facility. However, the investment plan was significantly scaled back, and the display plant never materialised. President Biden recently criticised Foxconn for failing to fulfill its investment pledge.
While declines were relatively milder in other Asian markets, with Shanghai, Shenzhen, and Japan experiencing less than a 1% drop during morning trade, South Korea saw a dip of 1.41%.
Tech stocks in Taiwan, as well as across Asia, also faced a downturn last week following remarks made by former U.S. President Donald Trump. Trump stated in an interview with Bloomberg that Taiwan should contribute financially to be under the U.S. defense umbrella and claimed that the island "did take about 100% of our chip business."
In response to Trump's comments, TSMC clarified last week that its investment plans in Arizona remain unchanged and that it does not consider joint ventures in the U.S. as a means to mitigate geopolitical risks.
Jeff Pu, managing director of tech research at Haitong Securities, explained that the decline in tech and chip-related stocks this week can be attributed to Biden's withdrawal from the race and investor concerns regarding geopolitical uncertainties. Pu also noted that many tech hardware stocks have experienced rapid and significant increases in valuation, making them vulnerable to corrections.
Despite the short-term correction, Pu remains optimistic about the outlook for the tech industry. Similarly, Jonah Cheng, chief investment officer at J&J Investment, acknowledges the high risks in the Taiwan stock market but believes that the selling pressure triggered by Biden's withdrawal will eventually subside.
Foreign institutional investors and insurance companies had already started selling Taiwan stocks earlier in July, likely as a profit-taking strategy. Cheng suggests that the recent buyers in the market are short-term and individual investors, making the market more susceptible to news-driven volatility.
Taiwanese tech stocks experienced a decline after Joe Biden withdrew from the U.S. presidential race.
TSMC, MediaTek, United Microelectronics Corp., and ASE Technology Holding all saw their shares drop.
Foxconn, a key player in AI server manufacturing, also faced a significant decline in its stock price.
Source: NIKKEI ASIA