The Taiwan Stock Exchange experienced a significant drop of 3.53% in its first trading session of the Year of the Snake, reflecting concerns over a potential trade war and the introduction of a cost-effective model in the global artificial intelligence sector. This decline was driven by the electronics sector’s reaction to the implementation of tariffs by U.S. President Donald Trump on countries such as Canada, Mexico, and China. Additionally, disruptions caused by DeepSeek, a China-based AI startup offering low-cost AI solutions, added to the market’s unease.

The Taiex, Taiwan’s weighted index, closed at 22,694.71, down 830.70 points, with a turnover of NT$492.83 billion. The market opened lower, breaking through the support level of 23,000 points, with semiconductor stocks facing notable pressure. Taiwan Semiconductor Manufacturing Co. (TSMC), a key player, witnessed a 5.73% decline, contributing significantly to the overall drop in the Taiex.

The fear of potential tariffs on semiconductors announced by President Trump further exacerbated the situation. Semiconductor-related companies like ASE Technology Holding Co. and Scientech Corp. also experienced notable losses. However, MediaTek Inc., a smartphone IC supplier, managed to buck the trend with a 2.39% increase.

Taiwanese contract electronics manufacturers operating in Mexico, such as Hon Hai Precision Industry Co. and Quanta Computer Inc., faced challenges, with significant declines in their stock prices. Foreign institutional investors were observed as net sellers, offloading shares worth NT$74.40 billion, marking one of the largest sell-offs in the market’s history.

While the electronics sector bore the brunt of the sell-off, non-tech stocks displayed mixed performances. Companies like Formosa Plastics Corp. and Nan Ya Plastics Corp. saw declines, while Uni-President Enterprises Corp. and Wei Chuan Foods Corp. recorded gains. In the financial sector, Mega Financial Holding Co. managed to rise, contrasting with Fubon Financial Holding Co. and Cathay Financial Holding Co., which experienced declines.

Analysts suggest monitoring the market closely to gauge the impact of potential tariffs on the semiconductor industry and to assess the Taiex’s technical support levels. The situation remains fluid, and investors are advised to stay vigilant amid the evolving trade dynamics initiated by President Trump.