Hon Hai, Taiwan's top electronics gear maker, dropped 4 percent and another Apple supplier, Wintek, also shed 3 percent. Apple stocks plunged overnight on a rare Wall Street downgrade based on signs of a severe slowdown in sales growth at Hon Hai.
"We've seen panic selling in Hon Hai and most tech shares," said Robin Hsu, who helps manage a government fund at Captial Asset Management.
"Investors are worried the Japan crisis will hurt Apple's supply chain across Asia," he said. At around 0305 GMT, the main TAIEX share index had dropped 73.56 points to 8,251.06, Electronics shares retreated 1.5 percent, with the world's top contract chip maker TSMC down 2 percent.
TSMC chairman Morris Chang said its revenue target for this year will not be affected by the earthquake in Japan.
However, its expansion plan for next year could be delayed if one of its Japanese equipment suppliers cannot resume operation in the short term, local media reported.
Mediatek, Taiwan's top chip design house, shot up nearly 5 percent after announcing its merger with Ralink via a share swap.