"We saw people retreating from the market and that's why the tech sector that had been outperforming recently lost momentum," said Tao Chih-wei, deputy manager of institutional investor division at Fubon Securities.
The tech sub-index dropped 0.87 percent as United Microelectronics Corp (UMC), the world's number-two contract chipmaker, slid 1.48 percent to T$20.00 and Powerchip, a memory chipmaker, was off 2.33 percent at T$25.20.
US stocks were closed on Monday due to the Presidents Day holiday, leaving the Taipei market without a direction.
While techs weakened, investors looked for bargains in the financial sector on expectations of further consolidation in the overcrowded banking industry.
Shares in Fubon Financial Holding jumped the daily 7 percent limit to T$31.50 and those of rival Hua Nan Financial were up 0.38 percent to end at T$26.70.
Analysts said the pullback on the main exchange could be short-lived as foreign investors have been big buyers recently, accumulating more than T$100 billion of local shares since late January, ahead of a scheduled MSCI upgrade.
Morgan Stanley Capital International (MSCI) will raise Taiwan's weighting to 100 percent by the end of May from 75 percent, a move that will trigger more foreign investments.
The over-the-counter market's TAISDAQ index fell 0.75 percent to 118.36.
March TAIEX index futures lost 0.76 percent to close at 6,097.