Nikkei Slumps 3% as Chip Stocks Tumble on AI Spending Concerns; Advantest Plunges 9.1%

Japan's Nikkei share average fell as much as 3% on Friday, led by chip-related stocks, as concerns mounted over the sustainability of spending to fund the AI boom. The index was down 2.8% as of 2003 GMT. Tokyo tracked overnight losses on Wall Street, amplified by late earnings from Amazon.com and Intel that showed massive cash burns. Chip equipment heavyweights Advantest and Tokyo Electron plunged 9.1% and 5.6%, respectively. Other AI losers included Ibiden, down 15.2%, Lasertec, down 13.8%, and SoftBank Group, down 6.7%. "This can be seen as a sign of growing concerns regarding the profitability of AI investments, which is weighing on share prices," said Maki Sawada, an equities strategist at Nomura Securities. The broader Topix fell a milder 1.3%. For the week, the Nikkei remains up 0.2%. The Bank of Japan will announce its policy decision on Friday and is widely expected to leave interest rates unchanged. Among the Nikkei's 225 components, 123 fell versus 100 that rose, with two trading flat.