TOKYO: Japan’s Nikkei share average fell for the first time this week on Wednesday as chip-sector shares sank after Nvidia said the U.S. government is limiting exports of its key chip to China.
Chip-testing equipment maker Advantest, an Nvidia supplier, was the Nikkei’s second-worst performer with a 6.6% tumble. Chip-making equipment manufacturer Disco tanked 8%.
The tech-heavy Nikkei lost 1% to close at 33,920.40, while the broader Topix dipped 0.6%.
Precision equipment makers dropped 2.1% as a sector, putting them among the worst performers from the Tokyo Stock Exchange’s 33 industry groupings.
The H20 artificial intelligence chip, targeted by the U.S. government, is currently Nvidia’s most advanced chip for sale in China and is central to its efforts to stay engaged with China’s booming AI industry.
Nvidia has been a key focus of U.S. export controls as officials attempt to keep the most advanced chips from being sold to China. As a result, Nvidia has been designing chips that come as close as possible to U.S. limits.
“The Nvidia news is a massive development for U.S. tech and tech companies everywhere,” Kyle Rodda, senior financial markets analyst at Capital.com, said.
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“It suggests that whatever innovation the company comes up with to get around U.S. restrictions, policymakers are going to eventually clamp down on it,” Rodda added.
“That’s going to stifle or limit Nvidia sales growth, market share and overall growth potential.”
Outside of chip-sector shares, Japanese equities had little direction as investors awaited additional news on U.S. President Donald Trump’s tariff policies.
Of the Nikkei’s 225 components, 142 fell, 81 rose and two traded flat.
In a sign that tariff worries remain front of mind, shipping was the Tokyo’s bourses worst performing industry group, slumping 3.2%.
U.S.-Japan trade talks are due to get underway this week, with Japan’s top negotiator, Ryosei Akazawa, arriving in Washington later on Wednesday for a three-day visit.
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