Taiwan's stock market dropped more than 1% as tech shares got hit, a bad day for chip investors after a sharp selloff in the U.S. overnight.

• Rising U.S. government bond yields, driven by inflation worries, pushed investors out of tech stocks worldwide.
• Chip stocks led the fall, with memory makers Nanya and Winbond dropping hardest and TSMC alone dragging the index down by a big chunk.
• Worries that big chipmakers have simply gotten too expensive added to the selling.
• August futures contracts settled the same day, and foreign investors trimmed tech holdings to protect their bets against the market.
• Money moved into safer telecom names like Taiwan Mobile, while foreign investors pulled a large sum out of Taiwanese shares overall.

Outlook: The index slipped below a key technical level, and if it does not climb back soon it is likely to fall further toward the next support around 44,000 points.