TSMC slumps 10% on tariff woes as Taiwan returns from holiday

The weakness now puts the benchmark more than 20% below a July peak. The drop comes after the US-imposed tariffs threaten to roil supply chains and slow growth.

Taiwan Semiconductor Manufacturing Co. tumbled by the stock exchange’s limit as trading resumed Monday in Taiwan, playing catchup to a global selloff triggered by President Donald Trump’s steep tariff hikes.

The chipmaker’s Taipei-listed shares slid 10%, putting pressure on the benchmark Taiex, which fell as much as 9,8%. The weakness now puts the benchmark more than 20% below a July peak. The drop comes after the US-imposed tariffs threaten to roil supply chains and slow growth.

While levies targeted at semiconductor exports are excluded so far, the 32% tariff on Taiwan is among the highest in Asia and caught investors off guard. TSMC’s US-traded shares slumped a total of 14% on Thursday and Friday when trading was closed in Taipei for a holiday. Trading is likely to remain volatile after China on Friday announced retaliatory tariffs on the US.

“Taiwan non-tech exporters will be more negatively impacted than tech related exporters, as reciprocal tariffs rates imposed on Asean and other emerging Asia countries such as Vietnam, Thailand and Malaysia surprised on the upside,” said Gary Tan, a portfolio manager at Allspring Global Investments.

The absence of chip tariffs limits direct risk to TSMC, Steven Tseng, senior technology analyst at Bloomberg Intelligence, wrote in a report, though he added that “rising prices under tariffs may suppress consumer demand, indirectly reducing orders for TSMC-manufactured chips.”

Concerns about geopolitical tensions and artificial-intelligence investments have weighed on the island’s stocks this year, with the index underperforming MSCI’s Asia Pacific gauge by about 8.5 percentage points as of Wednesday. Over the weekend, Goldman Sachs Group Inc. downgraded Taiwan equities to underweight, citing high exposure to US exports among other reasons.

Taiwan’s financial regulator has sought to stem further fallout by tightening its rules on short-selling, which go into effect Monday. The new measures will increase margin requirements and limit securities lending and remain in effect through April 11.

Foreign investors dumped a record $13 billion of Taiwanese securities last month, dragging the local dollar 1.1% lower versus the greenback and making it Asia’s the worst-performing currency. Taiwan’s state-backed banks actively sold US dollars last week to smooth swings in the foreign-exchange market. Strategists at Bank of New York Mellon Corp. and Goldman Sachs expect the currency to continue weakening.