Japan Stocks Fall on US Chip Weakness, Broadcom Shock Spreads, June 06

The Nikkei 225 fell 882.57 points to 66,588.12 on June 5 after US semiconductor giant Broadcom reported weak earnings and cut guidance. The selloff spread across Asia, with semiconductor and AI-related stocks under pressure despite strong long-term demand for AI chips. Japanese investors face a short-term correction even as the semiconductor industry remains supported by AI infrastructure investment.

Broadcom’s Earnings Trigger Global Selloff

Broadcom announced disappointing fourth-quarter results and lowered its forward guidance, sending its stock down 13% in US trading on June 4. The weakness spread rapidly to semiconductor equipment makers and memory chip producers. In Japan, the Philadelphia Semiconductor Index fell 2.15% overnight, but the damage extended far beyond chip makers. Tokyo’s market opened with heavy selling pressure as investors reassessed valuations across the entire AI-related sector.

Japan’s Market Takes Heavy Losses

The Nikkei 225 dropped 882.57 points, or 1.3%, to close at 66,588.12 on June 5. The index fell as low as 65,862.21 during the session before recovering slightly. Semiconductor equipment maker Tokyo Electron fell 4,210 yen to 59,450 yen. Despite the losses, 76% of stocks on the Tokyo Prime Exchange rose, showing that selling pressure remained selective rather than broad-based panic.

Why AI Chips Still Matter Long-Term

AI semiconductor demand remains strong. The global semiconductor equipment market grew 14% year-over-year to 36.55 billion USD in the first quarter of 2026, driven by AI chip production. Fujispin Holdings, which makes polishing pads for chip manufacturing, holds 80% global market share in its segment and reported record operating profit of 81.43 billion yen for the year ending March 2026, up 25.7% from the prior year. The company expects continued growth as AI infrastructure investment expands.

What Comes Next for Japanese Stocks

Analysts expect the correction to be temporary. Mitsubishi UFJ Financial Group (8306.T) hit a record high on June 5 as bank stocks benefited from expectations of higher interest rates. Toyota (7203.T) and other large-cap names remain supported by strong earnings. The selloff appears to be profit-taking after the Nikkei 225 reached a record 60,000 yen in late April, rather than a sign of fundamental weakness in the semiconductor sector.

Final Thoughts

The Nikkei 225 fell 1.3% on June 5 as Broadcom’s weak results triggered a global chip selloff, but the long-term case for AI semiconductors remains intact. Short-term volatility is likely as investors digest valuations, but AI infrastructure demand should support the sector over the next 12 months.

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