12:17 JST, July 17, 2025

TOKYO, July 17 (Reuters) – Japan’s Nikkei share average edged lower on Thursday, pulled down by a selloff in chip-related shares after Dutch chip-making tool supplier ASML ASML.AS sounded a revenue warning.

The tech-heavy Nikkei .N225 was down 0.3% at 39,544.62, as of 0214 GMT, with chip-sector heavyweights Tokyo Electron and Advantest being the two biggest drags in the index.

The broader Topix .TOPX, by contrast, eked out a 0.1% gain.

The Nikkei’s biggest decliner in percentage terms was Seven & i Holdings 3382.T, which tumbled 7.8% after Canada’s Alimentation Couche-Tard ATD.TOended its takeover bid for the operator of the 7-Eleven convenience store chain.

Heavily weighted chip-making equipment manufacturer Tokyo Electron 8035.T lost nearly 2% and smaller peer Lasertec 6920.T tumbled 5.4%, while chip-testing machinery maker Advantest 6857.T slid 1.8%.

ASML warned on Wednesday that it may not achieve revenue growth in 2026 as chipmakers building factories in the U.S. await clarity on the potential impact of tariffs.

For Japanese peers, “quarterly orders are likely to fluctuate but, based on the 12-month moving average, orders have not yet entered a recovery phase, similar to ASML,” Jefferies analysts wrote in a research note.

Orders for extreme ultraviolet lithography equipment, a key component in chipmaking, have been “stalled” since increasing “sharply” in the first half of last year, although a recovery is likely in 2026, they said.

Taiwanese chipmaker TSMC is set to release earnings at 0530 GMT, during Japanese market hours, an event that could potentially move the market.

Of the Nikkei’s 225 components, 115 fell versus 108 that rose, with two trading flat.

The index had been buoyed by a weakening yen earlier in the week, but the currency was trading marginally stronger from 24 hours earlier after bouncing off a 3-1/2-month low overnight.

A decline in crude oil prices weighed on energy shares, with the Topix oil and coal sub-index .IPETE.T falling 1.44% to be the worst performer among 33 industry groups. The mining sub-index .IMING.T, which includes oil explorers, lost 1.40%.