Asian semiconductor makers were in for a rough session Wednesday following a report that Taiwan's government planned to reduce its stake in Taiwan Semiconductor ( TSM - Get Report) by roughly half.

Taiwan Semi's stock slipped 7% in overseas trading after Bloomberg reported the Taiwan Development Fund will cut its stake in the world's biggest chip manufacturer to 4.1% from 7.3% through sales in U.S. markets. The fund will unload the roughly $1.2 billion slug in order to help fund a government budget deficit.

United Microelectronics ( UMC - Get Report), the second-biggest foundry, was also lower overseas.

The news comes at a difficult time for the shares, which had been falling steadily before rising Tuesday on a report showing a sharp rise in worldwide semiconductor orders in April. Taiwan Semi shares fell about 15% in the U.S. last week alone, only slightly more than the decline in United Micro over the same period.