Other major technology plays lost ground as well, with UMC's main competitor Taiwan Semiconductor Manufacturing Co giving up 1.83 percent for a T$53.50 close.
"Foreign funds are easing off on their buying of Taiwan stocks, and the market is partially affected by UMC as well," said Hotung Securities research chief Albert Lin.
"Investment trusts are buying small and medium electronics shares, but it is clear that financial shares are losing blood, and that is affecting the index," he added. The financial sub index fell 0.9 percent to 1,101.26.
The TAIEX has been sluggish in the past two sessions as foreign buying tapered off from an enthusiastic T$20.45 billion on Monday to T$5.8 billion on Wednesday.
Domestic investors are also wary of breaking through tough resistance on the technical charts at 6,183 points from an 8-month intraday high set on January 3.
"Confidence has not disappeared, but we may need to wait until next week to break through 6,183," said Kevin Lin, fund manager at Shinkong Investment Trust.
Display screen maker AU Optronics Corp fell 2.03 percent to close at T$48.30 ahead of its quarterly institutional investors' conference later on Thursday, where the company is expected to offer estimates on the first quarter.
Traditional industries and select electronic shares continued to enjoy support, keeping market turnover at a solid T$85.28 billion, steady with Wednesday's T$85.41 billion.
Wintek Corp, a maker of small-sized display screens, surged 5.44 percent to end at T$36.80 after posting strong January revenues, while top textile maker Far Eastern Textile Co Ltd rose 0.43 percent to T$23.10.
The over-the-counter market's TAISDAQ index was little changed with a 0.02 percent dip to 116.25 as small-cap shares held firm, but March TAIEX index futures lost 50 points, or 0.82 percent, to close at 6,078.