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China views the visit by Pelosi, second in the line of
succession to the U.S. presidency and a long-time critic of
China, as sending an encouraging signal to the pro-independence
camp in Taiwan and has repeatedly warned against it.
Taiwan is home to the world's biggest manufacturer of
semiconductors on contract, Taiwan Semiconductor Manufacturing
Co Ltd (TSMC). Shares of the company closed down 2.4%, while
peer United Microelectronics Corp (UMC) fell 3%.
Taiwanese stocks dropped 1.6%, marking their biggest percentage
decline in three weeks, while stocks in China posted their
biggest fall in more than two months as mounting tensions
unsettled Asian financial markets.
"The outlook for trade in Asia is likely to weigh on
semiconductors, given how much of the world's global production
comes from Taiwan," said Michael Hewson, chief markets analyst
at CMC Markets UK.
Semiconductor stocks globally felt the heat. Germany's Infineon
declined 2.3%, while Dutch firms ASML, ASMI and BESI fell
between 3% and 4%. U.S. chip stocks such as Nvidia Corp, Intel
Corp, Qualcomm and Micron Technology Inc dipped more than 1%
each in trading before the bell.
"This market reaction is expected following the strong
performance of equity markets in July," said Andrea Cicione,
head of strategy at TS Lombard in London.
"The longer term impact is unlikely to be significant unless the
situation escalates, which wouldn't be my expectation right
now."
Pelosi was set to visit the island on Tuesday, three sources
said, as several Chinese warplanes flew close to the median line
dividing the Taiwan Strait, a source told Reuters.
(Reporting by Bansari Mayur Kamdar and Medha Singh in Bengaluru;
Editing by Shinjini Ganguli)
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