Larger competitor Taiwan Semiconductor Manufacturing Co also lost 0.91 percent to close at T$54.50.
But smaller technology firms outperformed. Microchip designer VIA Technologies Inc jumped the 7 percent daily trading limit with a T$1.10 rise to T$17.50.
"At this point domestic investors are not very confident," said Daniel Tseng, manager of Fubon Securities institutional investor department, pointing to an intimidating technical barrier from a January 3 intraday high of 6,183.
"They are choosing smaller electronics shares, which is not helping the index very much," Tseng said. "The thinking is that electronics shares went from good to bad last year, and they should go from bad to good this year."
The over-the-counter market's TAISDAQ index jumped 2.06 percent to 116.27 points despite a sluggish performance on the main board as punters focused on smaller issues.
AU Optronics Corp, the world's third largest display screen maker, fell 0.4 percent, but smaller competitors posted gains with Hannstar Display adding 3.45 percent and Chunghwa Picture Tubes Ltd rising 1.76 percent.
Hannstar said on Tuesday prices have liquid crystal displays have stabilised after a steep fall in 2004.
Turnover was solid at T$85.40 billion, expanding from T$72.42 billion on Tuesday. Analysts said the market was building up momentum to challenge 6,183.
Transport shares were also among the day's big gainers amid higher freight rates. Taiwan's largest container shipper, Evergreen Marine Corp, rose 1.0 percent and bulk shipper U-Ming Marine Transport Corp rose 1.94 percent.
February TAIEX index futures were littled changed, edging up 5 points, or 0.08 percent, to 6,128.