By Junko Fujita
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 TVC:NI225 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 TSE:TOPIX slipped 0.18% to 3,955.93.
The Philadelphia SE semiconductor index NASDAQ:SOX 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 TSE:285A fell 7.5% to become the worst performer on the Nikkei. Fibre-optic cable maker Fujikura TSE:5805 slipped 6%.
Chip-testing equipment maker Advantest TSE:6857 lost 3.95%. Technology investor SoftBank Group TSE:9984 fell 5.4%.
Chip-making equipment maker Tokyo Electron TSE:8035 reversed course to trade 0.55% higher.
Game maker Nintendo TSE:7974, whose profits have been squeezed by rising memory chip prices, jumped 5.5%, while Sony Group TSE:6758 rose 2.34%.
Entertainment company Konami Group TSE:9766 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 (.IMING.T) lost 1.45% and oil refiners (.IPETE.T) 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.