Nikkei Falls 4% as Semiconductor Stocks Tumble to 62,364

2026-07-28

Nikkei Hits Two-Month Low

The Nikkei Stock Average fell sharply in Tokyo on the 28th, ending the day down 2,566 points, or 4.0%, from the previous session at 62,364. It was its lowest level in about two months, and the drop from the all-time high of 72,366 on June 25 topped 10,000 points.

Selling Hits Semiconductor Stocks

Selling on concerns over intensifying competition with Chinese rivals spread to semiconductor-related shares and rippled across Asian markets. Kioxia Holdings, a major semiconductor memory maker, closed at the daily limit-down level at 44,550 yen, down 10,000 yen, or 18%. Advantest and Tokyo Electron both fell more than 10%.

Spread to Asian Markets

South Korea's benchmark KOSPI plunged 11% from the previous day, sinking to its lowest level in about three and a half months since April 14. Taiwan's weighted index also fell 5%. The parent company of Chinese semiconductor memory giant ChangXin Memory Technologies (CXMT) raised huge growth capital in its listing on the 27th, intensifying worries about rising supply and fiercer competition.

Correction Deepens in AI Trade

Semiconductor-related stocks have been called AI picks and shovels, likened to the gold rush, when those selling the tools rather than digging for gold profited from the boom, as companies underpinning AI infrastructure. Even as concerns linger over excessive investment by hyperscalers, investors are beginning to focus on the rise of competitors. In July, startup Moonshot AI unveiled its new AI model Kimi K3, said to have performance close to that of US companies Anthropic and OpenAI.

As the advantages of US companies and their growth scenarios appear to be fading, a mood has spread to assess AI profitability. Kohei Okazaki, chief market economist at Nomura Securities, said, 'At this point, there are few views that Chinese players will become a serious threat, but they were used as a convenient excuse for profit-taking.'

Markets Cautious Ahead of Fed Meeting

The US Federal Reserve will hold the Federal Open Market Committee meeting on the 28th and 29th. While policy rates are widely expected to be left unchanged, some investors are wary of a surprise rate hike, which has also kept buyers on the sidelines. Masatsugu Akutsu, chief Japan equity strategist at BofA Securities, said there is no need to lower earnings assumptions for AI-related companies and sees 60,000 as the near-term downside target for the Nikkei. He sees growing moves to diversify positions that had been concentrated in AI-related stocks, but says the market has not reached a phase of pulling funds out of equities as a whole.

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