By Junko Fujita
Japan's Nikkei share average closed 2% lower on Tuesday as semiconductor-related heavyweights fell after a drop in South Korea's Samsung Electronics sent the benchmark KOSPI tumbling.
The Nikkei TVC:NI225 fell 2.12% to close at 68,256.96.
The broader Topix index TSE:TOPIX ended 0.97% lower at 4,062.26 after hitting a record high of 4,137.62 earlier in the session, as investors bought financial and other beaten-down value stocks.
"The market looked into the shares of Samsung Electronics KRX:005930, which fell even as the memory chipmaker's forecast beat the market forecast," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
Shares of Japan's high-flying memory maker Kioxia TSE:285A fell 11.26% and chip-related Advantest TSE:6857 and Tokyo Electron TSE:8035 lost 2.25% and 3.94%, respectively.
The tech-heavy Nikkei tends to track moves in South Korea's benchmark index, which is also heavily weighted toward chip stocks.
The benchmark KOSPI KRX:KOSPI fell as much as 8%, triggering circuit breakers for the sixth time this year, as Samsung Electronics KRX:005930 tanked as much as 10%.
The world's largest memory chipmaker on Tuesday forecast a 19-fold jump in second-quarter operating profit from a year earlier.
"In the short term, investors will keep selling AI stocks to book profits, but at the same time they are buying undervalued stocks," said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.
Japan's banking shares rose, with Mitsubishi UFJ Financial Group TSE:8306 up 2.26%. Shares of Mizuho Financial Group TSE:8411 and Sumitomo Mitsui Financial Group TSE:8316 inched up 0.39% and 0.18%, respectively.
Nomura Holdings TSE:8604 rose 3% to become the top percentage gainer in the Nikkei.
Toyota Motor TSE:7203 closed 0.79% higher.
Of the more than 1,500 stocks trading on the Tokyo Stock Exchange's prime market, 47% rose, 49% slipped and 2% traded flat.