Japan's Nikkei cuts losses as Tokyo Electron regains ground; chip stocks down

TOKYO: Japan’s Nikkei share average cut early losses on Monday, as index heavyweight Tokyo Electron reversed course to trade higher and investors rotated into beaten-down shares from AI-related stocks.

The Nikkei was down 0.6% at 68,952.33, as of 0201 GMT, after falling as much as 1.97% earlier in the session.

The broader Topix slipped 0.18% to 3,955.93.

The Philadelphia SE semiconductor index tumbled 5.3% on Friday, underscoring recent volatility among AI-related chipmakers that have fuelled much of Wall Street’s gains in recent years.

“Investors shifted their money to beaten-down stocks from AI-related stocks,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

“There was a concern in the market that memory chip prices have risen too much,” he said. Memory chipmaker Kioxia fell 7.5% to become the worst performer on the Nikkei. Fibre-optic cable maker Fujikura slipped 6%. Chip-testing equipment maker Advantest lost 3.95%.

Technology investor SoftBank Group fell 5.4%.

Chip-making equipment maker Tokyo Electron reversed course to trade 0.55% higher.

Game maker Nintendo, whose profits have been squeezed by rising memory chip prices, jumped 5.5%, while Sony Group rose 2.34%.

Entertainment company Konami Group climbed 4.17% to become the top percentage gainer on the Nikkei.

The fragility of the U.S-Iran interim peace deal has not become a market-moving cue in Japan, said Yasuda. Energy-related shares, which typically react positively to war tensions, fell on Monday.

The mining sector lost 1.45% and oil refiners fell 1.77%.

Of the more than 1,500 stocks trading on the Tokyo Stock Exchange’s prime market, 58% rose, 38% fell and 1% traded flat.