Japanese stocks fall sharply as chip shares lead broad market decline

Japanese stocks closed sharply lower on Wednesday, extending losses from the previous session as weak sentiment in global markets weighed on investors. The Nikkei 225 fell 2.11% to 66,819, while the broader Topix Index lost 1.37% to 4,006.

Technology stocks came under pressure after an overnight selloff on Wall Street, with semiconductor shares leading the decline. Investor sentiment was also affected by reports that China's DeepSeek is developing its own AI chip, raising concerns about increased competition in the sector.

Markets were further weighed down by rising tensions in the Middle East and higher oil prices after the US carried out fresh airstrikes on Iran following recent attacks on ships passing through the Strait of Hormuz.

Chip and AI-related companies posted some of the biggest losses, including Taiyo Yuden, Tokyo Electron, Advantest, Fujikura, and Ibiden. Major consumer and industrial stocks also ended lower, with declines in Fast Retailing, Toyota Motor, and Mitsubishi Heavy Industries.

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