The main TAIEX share index stayed on positive territory throughout the session, ending up 34.11 points at 5,798.41, helped by gains on Wall Street.
The day's rise added to a 2.33 percent rally on Monday but turnover was flat with Monday at T$77.0 billion ($2.3 billion).
The electronics sub-index rose 0.72 percent and financials, second only to techs in Taiwan's weighting, finished up 0.56 percent.
While concerns linger over high oil prices, most major tech companies have given upbeat views on growth of shipments in the run up to the year-end holidays.
Before the rebound this week, market players had retreated to the sidelines after foreign investors stepped up selling of local shares.
High Tech Computer (HTC), the market's most active stock by turnover, shot up 4.78 percent after its earnings in the first nine months of the year grew 175 percent from a year earlier. The Economic Daily News said the firm is expected to see sales rising to a record in the traditional peak manufacturing season in the fourth quarter.
Taiwan's top electronics parts maker, Hon Hai Precision Industry Co, rose 3.79 percent after the company posted a better-than-expected 41 percent jump in third-quarter profit. Quanta Computer Inc, the world's largest contract maker of laptop computers, gained 3.02 percent. The firm forecast laptop shipments to rise 10-15 percent in the fourth quarter from the third, even though its third-quarter earnings were slightly below market expectations.
The upbeat forecast outweighed a warning of a shortfall in third-quarter revenue and earnings by Dell Inc, one of Quanta's major customers.
Asustek Computer Inc gained 2.62 percent on a local media report that the company will start making a small amount of laptops for Dell in late 2006.
Epistar Corp, Taiwan's top producer of LED (light emitting diode) chips for colour-screen mobile phones, was another bright spot, surging 6.15 percent on hopes of rising demand next year.
China Development Financial Holding Corp fell 4.29 percent after the company's board cancelled a plan to issue 795 million global depository shares due to poor market sentiment.