TAIEX plunges as Japan quake compounds global chip selloff

Taiwan's TAIEX plunged 1,564 points, or 3.8%, to close at 40,039 on Wednesday, July 29, extending a four-session losing streak to its lowest level since May as a global semiconductor sell-off collided with fresh supply-chain uncertainty from a powerful earthquake in Japan.disruptionbanking+1

Earthquake Forces Chip Plant Evacuations

A magnitude 7.1 earthquake struck Japan's Kumamoto prefecture on July 28 at 4:27 p.m. local time, killing at least 18 people and causing widespread damage across the southwestern island of Kyushu. The quake forced the precautionary evacuation of workers at TSMC's Taiwan Semiconductor Manufacturing Company Limited ↘ 4.50% Japan Advanced Semiconductor Manufacturing (JASM) plant in the region. TSMC said late Tuesday that post-earthquake structural inspections had been completed and operations were gradually resuming, though detailed assessments remained ongoing.reuters+2

Sony Semiconductor Manufacturing halted operations at its Kumamoto Technology Center and said it was evaluating damage to buildings and manufacturing lines. Renesas Electronics suspended operations at two factories near the epicenter, reporting cracked walls and fallen ceiling panels at one site and water leakage at another, though cleanroom environments were being maintained. Honda ↗ 1.32% suspended its Kumamoto plant until at least July 31.sony-semicon+2

AI Valuation Rout Spreads From Korea to Taiwan

The earthquake layered additional risk onto a market already reeling from weeks of selling driven by AI valuation concerns. The TAIEX has now lost more than 7,000 points from its late-June peak above 48,000. The sell-off follows the collapse of South Korea's KOSPI, which fell more than 10% in a single session on July 27 and has declined roughly 33% from its peak.youtube+2

TSMC shares have dropped more than 17% since their June high despite the company reporting a 77% year-on-year rise in second-quarter net profit and raising its full-year revenue growth outlook above 40%. Reports of Chinese advances in semiconductor manufacturing, including the IPO of memory maker CXMT and progress on domestic lithography equipment, have intensified concerns about the durability of premium chip valuations.disruptionbanking

Aftershock Risk Remains

Investors face continued uncertainty as Japanese authorities reported more than 60 aftershocks following the main quake. Whether lasting disruption to semiconductor capacity in Kyushu emerges will depend on the outcome of ongoing equipment and wafer inspections at multiple facilities across the region.aljazeera