Japan's Nikkei reverses course to end higher as chip-related shares cut losses

Japan's Nikkei share average reversed course to end higher on Monday, as chip-related stocks cut losses after South Korea rolled out sweeping chip and AI mega-projects.

The Nikkei closed 0.15% higher at 69,468.11, after falling as much as 1.97% earlier ‌in the ⁠session. ⁠The broader Topix rose 0.47% to 3,982.

South Korean President Lee Jae Myung said the world's two largest memory chipmakers, Samsung Electronics and SK Hynix, would invest some $520 billion with suppliers to build two new chip fabrication sites in the country.


"What pushed the Nikkei lower were chip-related shares, and what made the Nikkei reverse the loss were also chip-related shares," said ⁠Kazuaki Shimada, ‌chief strategist at IwaiCosmo Securities.

Memory chipmaker Kioxia narrowed its early loss, ending 4.5% lower. Chip-testing equipment maker Advantest fell 1.51%. ⁠Chip-making equipment maker Tokyo Electron rose 2.44%.

Those shares declined in early trade after the Philadelphia SE semiconductor index's 5.3% fall on Friday. The decline underscores recent volatility among AI-related chipmakers that have fuelled much of Wall Street's gains in recent years.

On Monday, investors rotated out of AI-related stocks to beaten-down shares, 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.

Game maker Nintendo, whose profits have been squeezed by rising ⁠memory chip prices, jumped 5.25%, while Sony Group rose 3.13%.

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 1.83% and oil refiners fell 1.07%.

Of the more than 1,500 stocks trading on the Tokyo Stock Exchange's prime market, 69% rose, 26% fell and 2% traded flat.