TOKYO: Tokyo’s key Nikkei index saw its largest drop in more than three years on Friday, following reports that Israel carried out strikes on Iran and after chip giant TSMC spooked tech stocks.

The benchmark Nikkei 225 index ended down 2.66 percent, or 1,011.35 points, to 37,068.35, marking its largest fall in points since February 2021.

The broader Topix index fell 1.91 percent or 51.13 points to 2,626.32 yen.

Major high-tech and semiconductor shares fell sharply as shares of Taiwanese chip titan TSMC lost 4.9 percent on Wall Street on Thursday after it pointed to “weakening macroeconomic conditions” and softening demand.

Earlier Thursday, TSMC — which dominates the world’s chip-making industry — nonetheless announced a nearly nine percent increase in net profit in the first quarter.

“Asian shares are falling across the board. Semiconductor shares are being sold,” said Chihiro Ota of SMBC Nikko Securities.

He said roughly half of the Nikkei’s loss can be attributed to the semiconductor sector.

Tensions in the Middle East were also weighing on the market, after Iran’s state media reported explosions were heard in the central province of Isfahan, as the world braced for what might happen next between Israel and the Islamic republic.