Asian equity markets showed a clear divergence today. South Korea’s KOSPI Index, powered by a strong rebound in semiconductor stocks, surged approximately 6.2% to 6,872.61 points before midday, triggering the buy-side sidecar mechanism. Samsung Electronics jumped 8.99%, while SK Hynix soared 13.14%. Taiwan’s stock market, after opening more than 400 points higher and reclaiming the 45,000 level, saw follow-through buying dry up, with the index quickly reversing into negative territory. Intraday swings exceeded 700 points in a highly volatile session.

The explosive rally in South Korean stocks was primarily catalyzed by SK Hynix’s announcement that it would spend ₩40 trillion (approximately $28.7 billion, or NT$910 billion) to repurchase and cancel treasury shares — an epic-scale program that directly ignited a revenge rally in semiconductor stocks. Japanese equities also rebounded, though more moderately, with the Nikkei 225 Index up 1% to 65,982.49 points by midday, helped by a pullback in long-dated U.S. Treasury yields and improving risk sentiment.

In Taiwan, the weighted index initially surged more than 440 points in early trading, buoyed by overnight gains in Taiwan index futures, reclaiming the 45,000 level. TSMC (2330.TW) opened NT$15 higher at NT$2,365, recovering its monthly moving average. However, follow-through buying faded and the index was steadily pressured lower. By midday, the weighted index stood at 44,595.12 points, down 124.23 points, with the quarterly moving average lost once again. In contrast, the over-the-counter index showed greater resilience, still up approximately 0.43% intraday, indicating that capital flows into small- and mid-cap stocks remained more active than into large-cap heavyweights.

Large-cap stocks broadly weakened today. MediaTek (2454.TW) fell NT$115 to NT$3,730, a decline of nearly 3%; Delta Electronics (2308.TW) dropped NT$20 to NT$1,745, down approximately 1.42%; United Microelectronics (2303.TW) traded at NT$114.5, down NT$1 or 1%; ASE Technology Holding (3711.TW), Elite Material (2383.TW), and Unimicron (3037.TW) all fell between 1% and 2%. TSMC managed to hold near the flat line, oscillating around NT$2,370.

Memory Sector Ignites Against the Trend

The strongest focus in the electronics complex today was undoubtedly memory. Nanya Technology (2408.TW) surged 6.44% to 8% to NT$512 intraday; Winbond Electronics (2344.TW) rose 3.57% to 6%, with the two stocks ranking first and third respectively in Taiwan market turnover. Powerchip Semiconductor Manufacturing (6770.TW) also held in positive territory in early trading. Other names including AP Memory Technology (6531.TW), Formosa Advanced Technologies (8131.TW), Walton Advanced Engineering (8110.TW), and Macronix International (2337.TW) all traded higher, with the sector moving in unison as the AI-driven demand narrative for DRAM, HBM, and storage continues to gain traction.

Fiberglass cloth, an upstream PCB material, emerged as another strong focal point. Fulltech Fiber Glass (1815.TW) hit its daily limit at NT$107.5 intraday, with trading volume reaching 92,477 lots and turnover of approximately NT$9.84 billion (approximately $309.0 million), reflecting both volume and price expansion as AI high-speed transmission drives tight supply-demand dynamics for advanced materials. Panel-level packaging themes retained trading interest, with Innolux (3481.TW) seeing volume exceed 80,000 lots in early trading, ranking among the top five most actively traded stocks, though the overall momentum was less coordinated than in the memory sector.

Passive components were not among today’s strong performers. Yageo (2327.TW) opened higher but reversed into negative territory, falling more than 2% to 4% to NT$552 intraday. Walsin Technology (2492.TW) plunged more than half a daily limit, while other names including Chinsan Electronic (8042.TW), Ralec Electronic (2478.TW), Lelon Electronics (2472.TW), ABC Taiwan Electronics (3236.TW), and Thinking Electronic (6834.TW) all posted declines of 3% to 7%, with the sector under heavy selling pressure as it enters a consolidation phase following recent gains.

Mixed External Environment

The biggest market focus today was SK Hynix’s announced buyback program, which directly triggered a revenge rally in South Korean semiconductor stocks. In the United States, the Treasury Department announced that starting in September it would double the size of certain 10- to 30-year Treasury buyback operations to $4 billion (approximately NT$130 billion), helping to suppress long-end yields. However, the latest Federal Reserve meeting minutes remained hawkish, and concerns over further rate hikes have not been fully resolved.

Looking back at the previous session, Taiwan’s weighted index plunged 589.33 points on August 19 to close at 44,719.35, losing both the 45,000 level and the quarterly moving average, marking a second consecutive bearish daily candle. The three major institutional investor categories sold a combined net NT$70.85 billion (approximately $2.2 billion), with foreign investors and mainland Chinese capital selling a net NT$41.64 billion (approximately $1.3 billion), investment trusts selling NT$12.09 billion (approximately $379.7 million), and proprietary traders selling NT$17.12 billion (approximately $537.5 million), leaving short-term positioning cautious. The Philadelphia Semiconductor Index plunged nearly 5% that day, with Micron, SanDisk, and Marvell all falling more than 7%, while SK Hynix’s ADR tumbled 9.2%. Selling pressure quickly spread to Asian markets, with South Korea’s KOSPI closing down 5.8%.

Notably, while Taiwan’s memory sector was dragged down on August 19, some module makers demonstrated resilience. Team Group (4967.TW) bucked the trend early, rising more than 2%, while Innodisk (5289.TW) successfully reclaimed its 10-day moving average and turned positive. Innodisk reported second-quarter net profit of NT$10.37 billion (approximately $325.6 million), up 90% quarter-over-quarter and more than 55-fold year-over-year, with earnings per share of NT$108.93 — earning more than 10 times its paid-in capital in a single quarter. First-half net profit reached NT$15.83 billion (approximately $497.2 million), up 29-fold year-over-year, with earnings per share of NT$166.45, rewriting Taiwan’s memory industry records. Team Group reported July revenue of NT$2.54 billion (approximately $79.9 million), up 98.75% year-over-year, and cumulative revenue for the first seven months of NT$19.18 billion (approximately $602.2 million), up 71.29% year-over-year, both demonstrating strong growth momentum.

Market Outlook

The key short-term level for Taiwan’s market remains support at 44,500 points. If TSMC cannot stage a meaningful recovery, upside for the index will be limited. Capital flows are likely to continue rotating rapidly among memory, PCB materials, and small- to mid-cap thematic stocks. Whether the 45,000 level can be firmly reclaimed remains the critical question going forward, and short-term traders should remain mindful of high-level volatility risks. The market continues to digest hawkish signals from the Federal Reserve and concerns over massive AI capital expenditure. While today’s rebound in Taiwan was led by large-cap stocks and AI supply chain names, the lack of follow-through buying suggests trading volume will likely contract further from yesterday’s levels to approximately NT$800 billion (approximately $25.1 billion).