Japan's Nikkei suffers second-biggest drop of the year on OpenAI IPO delay fears

Japan's stock market, increasingly driven by semiconductor and AI-related shares, suffered its second-largest correction of the year Thursday after reports raised the possibility that OpenAI could delay its initial public offering. Kioxia — which earlier this month overtook Toyota Motor to become Japan's most valuable company by market capitalization — and SoftBank Group, whose share price has long reflected expectations of an OpenAI investment payoff, both plunged more than 10%, dragging the Nikkei 225 down more than 4%.

The Nikkei 225 closed down more than 4% on Thursday. The index briefly fell more than 5% during trading, marking its steepest single-day drop since March 9. The selloff came just one day after the index had surged more than 4%, with large-cap AI and semiconductor stocks bearing the brunt of the reversal.

The correction reflects a broader shift in Japan's market leadership. Kioxia surpassed Toyota Motor on June 1 to claim the top spot among Japanese companies by market capitalization. The fact that a memory chip maker had overtaken Japan's flagship automaker illustrated how expectations for NAND flash and enterprise SSD demand — driven by the expansion of AI data centers — are reshaping which sectors lead the Japanese market.

Beyond Kioxia, SoftBank Group, Tokyo Electron, Advantest and other large-cap stocks tied to AI investment, memory chips and semiconductor equipment have emerged as key drivers of the Nikkei's direction. As Japan's market leadership broadened from automakers and financial stocks to AI infrastructure plays, the prospect of a delayed OpenAI listing dampened the expectations priced into those shares.

Uncertainty over OpenAI's listing timeline hit SoftBank Group first. The conglomerate, widely regarded as a major OpenAI investor, closed Thursday down 12.53% at 6,226 yen ($38). Concerns grew over when SoftBank might recoup its investment and how its stake in OpenAI would be valued if the IPO were pushed back.

Kioxia also closed lower on Thursday, falling 11.24% to 92,180 yen. While Kioxia is not directly tied to OpenAI's listing schedule, its shares had risen sharply in recent months on expectations that expanding AI data center investment would fuel demand for memory chips. Fears that an OpenAI IPO delay could cool broader AI investment spending spread the selloff to memory-related stocks as well.

Semiconductor equipment and electronic components stocks also fell across the board. Advantest, which makes semiconductor testing equipment, dropped 9.64%, while Tokyo Electron fell 3.21%. Electronic components maker Murata Manufacturing declined 8.92%. The correction was sharpest in sectors that had led Japan's technology rally — AI chip testing equipment, manufacturing equipment and data center components.

The weakness extended to components and materials stocks. MLCC maker Taiyo Yuden fell 10.84%, semiconductor equipment maker Disco dropped 8.68%, and package substrate maker Ibiden declined 8.99%. Furukawa Electric, TDK and MinebeaMitsumi, all tied to wiring and electronic components, each fell around 8%.

Heo Jae-hwan, a researcher at Eugene Investment & Securities, cited two factors behind the sharp declines: weakness among big tech companies such as Apple, which raised product prices due to higher semiconductor costs, and The New York Times' report on the possibility of an OpenAI IPO delay. "Both reflect the burden of overconcentration in AI and semiconductors," he said.

The scale of Japan's decline, however, was more contained than South Korea's. On the Kospi, Samsung Electronics and SK hynix together account for more than half of the index's total market capitalization, meaning sharp swings in semiconductor stocks translate directly into broad index volatility.

In Japan, by contrast, large-cap automakers, financial stocks and consumer goods companies rose or held steady even as AI and semiconductor shares tumbled, cushioning the overall index decline. Toyota Motor gained 2.50%, Mitsubishi UFJ Financial Group rose 0.37% and Sumitomo Mitsui Financial Group advanced 0.80%, while Fast Retailing edged down just 0.27%.