The Chip Index Fell About 12 Percent the Day After Wall Street Cheered the Midterms. On Friday, Taiwan Authorized Its NT$500 Billion Fund to Step In.

On Wednesday, November 4, the day after the US midterm elections, the Dow jumped 1,569 points, or 3 percent. It was its best day after a midterm since 1982, helped by falling oil prices and lower Treasury yields, Yahoo Finance says.

On Thursday, November 5, the market turned to a different question: what Democratic control of both chambers of Congress, and a wave of local votes against data centers, means for the AI build-out. The answer it gave was brutal. The PHLX Semiconductor Index fell about 12.3 percent, its worst day since March 2020, according to NBC News and Yahoo Finance. It closed roughly 38 percent below its June record.

On Friday, November 6, the bill arrived in Taipei. The Taiex fell as much as about 9 percent, and by the afternoon the committee that runs Taiwan's National Financial Stabilization Fund had authorized its NT$500 billion pool, about US$15 billion, to intervene. It is the 10th time since the fund was set up in 2000.

Thursday in New York

The S&P 500 fell 4.36 percent to 7,354, its worst day since the April 2025 tariff crash. The Nasdaq Composite fell 5.52 percent to 24,315. The Dow lost 1,833 points, or 3.4 percent. Yahoo Finance says that was the Dow's worst second session after a midterm in data going back to 1896, a day after its best post-midterm session in 44 years.

The damage concentrated in the AI supply chain. Nvidia closed at $181.60, down 9.26 percent, its biggest one-day drop since April 2025, NBC News reports. Yahoo Finance estimates Nvidia alone lost about $450 billion in market value. AMD fell 17.26 percent and Broadcom 10.43 percent. NBC says Micron and Western Digital fell about 17 percent, SanDisk 22 percent and Arm 13 percent. Across the S&P 500, roughly $2.8 trillion to $3 trillion of value disappeared, depending on whose count you use.

Earnings lit the fuse. NBC says Qualcomm and Arm's Wednesday-night results, viewed as mixed, triggered the chip selling. But none of the coverage we read blamed two earnings reports alone for a 12 percent move in a whole index. The coverage pointed at politics: fears that newly elected officials will slow or halt data center construction in the states where the build-out is concentrated.

What Voters Actually Decided

The local data center votes are real, and they mostly went one way. Fortune counted 41 data center ballot measures on Tuesday, 21 of them in Ohio across 18 municipalities. Newsweek, citing Ballotpedia, counted 39 in 8 states, with the same 21 in Ohio. By Wednesday morning, Fortune counted at least 14 Ohio municipalities that had passed bans or other restrictions. In Trenton, a ban passed by about 80 to 20.

The biggest market is Texas. Wells Fargo estimates that 27 percent of planned data center gigawatts are in the state, according to Fortune, and Democrat Gina Hinojosa beat Republican Gov. Greg Abbott. NBC also names Ohio, Michigan and Georgia as big data center markets that worry investors.

Here is the detail the sell-off skipped. Texas had already stopped issuing data center permits. On Monday, September 21, Abbott directed the Texas Commission on Environmental Quality to "pause the issuance of all permits related to data center projects until ERCOT completes its review." That was a Republican governor, 43 days before the election.

Friday in Taipei

Taiwan has no vote in any of this, but it makes the chips. TSMC is more than 40 percent of the Taiwan market's capitalization, Focus Taiwan notes, which makes the Taiex a leveraged bet on American data centers.

The index opened down about 3,700 points and hit an intraday low of 37,837.05, about 9 percent below Thursday's close. It recovered after the Financial Supervisory Commission said it would meet on support measures and closed at 39,701.64, down 1,873.08 points or 4.51 percent. That was its fourth-largest single-day point loss. TSMC closed down 4.69 percent.

What Taiwan Did

• The fund: the stabilization fund's committee authorized its executive secretary to deploy money as needed. The fund is NT$500 billion. This is its 10th intervention since 2000.
• Short selling: from Monday, November 9, intraday short-sale orders are capped at 3 percent of a stock's average daily volume over the previous 30 days, down from 30 percent, and the minimum short-selling margin rises to 130 percent from 90 percent, Bloomberg reports.
• Buybacks: the Financial Supervisory Commission encouraged listed companies to buy back their own shares.
• The pressure: foreign investors sold a net NT$994.32 billion of Taiwan stocks in October, a monthly record, and another NT$524.4 billion so far in November, according to Focus Taiwan.

The last intervention is a useful guide. It ran 279 days, from April 9, 2025 to January 12, 2026, after the US reciprocal tariff announcement. During it, the Taiex rose 75.76 percent. The fund invested only NT$12.25 billion, about 2.5 percent of its NT$500 billion size by our math, and booked a net profit of NT$9.93 billion, according to Focus Taiwan. Most of that money went into TSMC.

Our Take

Thursday priced a question about where data centers get built as if it were a question about whether they get built. Those are not the same risk, and the difference matters for every AI company that buys compute.

The local votes in Ohio are real constraints, but they are constraints on sites. A town that bans a 25 megawatt facility does not cancel the GPU order; it moves it, usually at higher cost and with a delay. The largest single pause in the country, in the state with about a quarter of the planned capacity, was ordered by a Republican governor in September. Investors had about seven weeks to price that in. A Democratic Congress also does not issue state permits. It can hold hearings, push cost rules like the Ratepayer Protection Act we covered in September, and make the politics louder. That is a slower and more expensive build-out, not a cancelled one.

None of the coverage we read cited a cancelled chip order or a cut to a hyperscaler's spending plan. That is why I read Thursday as a repricing of risk, not a change in demand. After a 38 percent fall from the June record, the chip index was already priced for a lot of bad news; Thursday added politics on top.

Taiwan's response is sensible, and the short-selling cap is the part with teeth. The fund itself works mostly as a signal. Last time, it moved the market with about NT$12 billion of actual buying. But no fund in Taipei can fix the underlying exposure. When TSMC is more than 40 percent of your market, your stock exchange is a vote on American data center permits, and you do not get a ballot.

My read: the next real data point is not political. Nvidia reports on Tuesday, November 17, 11 days after Friday's close. If its guidance holds, Thursday will look like a political scare. If it does not, Taiwan's fund will be busy for a long time.

Three Signposts for the Next 60 Days

First, Nvidia's November 17 guidance, and whether any hyperscaler trims its capital spending plan in the weeks after. Second, whether Taiwan's fund actually buys, and how much, since authorization is not the same as deployment. Third, whether ERCOT finishes its audit and Texas lifts its permit pause before the new governor takes office, or whether the pause simply carries over to the Hinojosa administration.

Sources: NBC News, Yahoo Finance, The Motley Fool market close, Fortune on the sell-off, Fortune on Ohio ballot measures, Newsweek, Focus Taiwan on the fund, Focus Taiwan on the Taiex close, Focus Taiwan on the last intervention, Bloomberg, EquityPandit, FOX 7 Austin on the Texas permit pause, Reuters via The Star, Nvidia.