The Nikkei 225 Index fell 0.3% to below 68,100, while the broader Topix Index declined 0.8% to 4,030 on Wednesday, extending losses from the previous session as Japanese equities tracked an overnight selloff on Wall Street led by renewed weakness in semiconductor stocks.
Reports that China's DeepSeek is developing its own AI chip also weighed on technology shares.
Investors further reacted to escalating tensions in the Middle East and soaring oil prices after the US launched fresh air strikes on Iran following recent attacks on ships transiting the Strait of Hormuz.
Heavyweight stocks posting notable declines included Tokyo Electron (-2.7%), Taiyo Yuden (-3%), Fujikura (-1.4%), Ibiden Co (-3.3%), and Mitsubishi Heavy Industries (-3.4%).