Nikkei drops 4% as global AI chip selloff sweeps Asian markets, Kioxia halves from peak

Summary

Japan's Nikkei 225 fell 4% on July 17, briefly dropping 4,100 points intraday, to close more than 11% below its June record and enter correction territory. Kioxia, Japan's largest memory chipmaker, dropped 16% in the session, halving its market value from the June peak. Tokyo Electron and Advantest also fell sharply in what Nikkei Asia described as an "AI deleverage." Investors in Japan and across Asia questioned whether returns from AI infrastructure spending can justify two years of elevated chip-sector valuations. China's AI shares also retreated, extending a rout that had started on Wall Street.

The split

Japanese financial media centered the story on memory chips, treating the Kioxia rout as a specific valuation correction for a newly listed group. International outlets framed it as a broader global "AI deleverage" linked to Wall Street, with no single catalyst named for the session.

By the numbers

• 4%, Nikkei 225 single-day decline on July 17
• 4,100 points, the intraday low dive by the Nikkei average
• 11%, how far below its June record the Nikkei closed
• 16%, Kioxia's single-day loss
• Halved, Kioxia's market value from its June peak

Why it matters

The selloff drags chipmakers across Japan and China that supply the global AI supply chain, from memory stacks to advanced packaging. A sustained deleverage could tighten the capital available for the next round of fabrication investment at a moment when TSMC and rivals are scaling aggressively to meet AI demand.

What to watch

• Whether the Nikkei stabilises or extends declines in coming sessions
• Kioxia production and expansion plans as market capitalisation shrinks
• Whether Wall Street's AI-sector correction deepens and pulls other Asian tech indices lower
• Any earnings guidance from Tokyo Electron or Advantest that signals a shift in chip-cycle expectations