The TAIEX finished 0.5 percent lower at 5,632.97 points, its lowest closing level since August 20, 2004. Among the biggest losers were electronics shares, financial shares and tourism-related shares.
"OMC's result was disappointing, further hitting the already weak investor confidence," said Kevin Chung, an analyst at Jih Sun Investment Advisory.
"For the main index, this is the fifth straight weekly decline, leaving it with little room to either surge or plunge next week." Turnover increased slightly to T$68.3 billion ($2.03 billion) from T$65.8 billion a day.
Another factor weighing on the market was the settlement of MSCI Taiwan index futures, traded in Singapore, on Friday, analysts said.
United Microelectronics Corp (UMC) fell for a second day and was the most actively traded issue, ending down 3.46 percent. Foreign investors sold a net 136.6 million UMC shares on Thursday, topping their net sale list, after the company reported an 80 percent fall in quarterly net profit.
Taiwan Semiconductor Manufacturing Co (TSMC), the world's biggest contract maker of microchips, rose 1.61 percent after it forecast gross margin growth for the fourth quarter.
Acer Inc, the world's fourth-largest PC maker, plummeted 6.56 percent and was the fourth most active share by value. After the market closed, Acre reported worse-than-expected third-quarter results.
Other companies that fell after reporting third quarter earnings include Chang Haw Bank, which ended down 2.96 percent, and China Steel Corp (2002.TW), which ended down 0.77 percent.
Companies that rose on earnings news include Novato Microelectronics Corp, a designer of LCD driver chips, which rose 2.61 percent, Taiwan's top computer gear and handset maker BenQ Corp, which gained 1.53 percent, and LCD maker HannStar Display Corp, which was up 0.16 percent.
Far Eastern Textile Ltd rose 4.99 percent, bringing its gains since on Thursday to about 12 percent, on market talk that major shareholders are buying back some shares, said Chiang Chen-sheng, a manager at Masterlink Investment Advisory.
Far Eastern is the flagship of Taiwan's second-largest industrial conglomerate. Tourism-related stocks fell 1.57 percent on profit taking after rising in the week on hopes that China will soon allow more Mainland Chinese to visit the island.
Ambassador Hotel fell 0.21 percent. China's top tourism official will arrive in Taiwan later on Friday for a 10-day visit. Surplus Technology Inc rose 1.96 percent ahead of its results.
After the market closed, the consumer IC designer said third-quarter net profit was down 10 percent from a year ago. President Chain was unchanged.
The chain operator of 7-11 convenience stores said that net profit rose to T$3.159 billion in the first nine months.