Japan's Nikkei slips as chip shares pressured by AI capex caution

TOKYO, Oct 22 (Reuters) - Japan's Nikkei share average declined on Thursday as chip-sector shares gave back the previous session's gains, with investors cautious about the outlook for AI-related spending next year.

Despite posting overall solid results after Wednesday's Wall Street close, US chip equipment maker Lam Research shares slipped in extended trading, with Iwai Cosmo Securities analyst Kazuyoshi Saito pointing to worries about demand from China.

"In China, there was a rush to procure manufacturing equipment ahead of schedule amid concerns over tighter regulations, and the market seems not to have fully priced in the subsequent payback," he said.

The tech-heavy Nikkei .N225 lost 0.8% to 64,128.54 by 0137 GMT, after rallying 0.9% on Wednesday.

The broader Topix .TOPX, by contrast, was flat on Thursday, following the previous day's 0.9% advance.

Services .ISVCS.T was the best performer among the Tokyo Stock Exchange's 33 industry groups, gaining 2.2%.

Japanese stocks had already had a chance to react to Tuesday's strong after-market earnings reports from US companies SpaceX SPCX.O and Super Micro Computer SMCI.O, making them vulnerable to profit taking in the latest session, said Wataru Akiyama, an equities strategist at Nomura Securities.

"The market is looking out to 2027 and if AI capex will continue, and there's quite a lot of caution among investors," he said.

Chip-sector shares led the Nikkei lower, with Tokyo Electron 8035.T down 4.1%, shaving 212 points from the index because of its heavy weighting. Screen Holdings 7735.T dropped 6% and Lasertec 6920.T dipped 2.7%.

Data-centre cable maker Fujikura 5803.T lost 3%. AI-focused startup investor SoftBank Group 9984.T skidded 3.1%.

Many other tech names advanced though. Cybersecurity firm Trend Micro 4704.T jumped 6.6% following the announcement of critical vulnerabilities in the PHP programming language, which spurred several governments in Europe to take their websites offline to protect their systems.

IT services provider SHIFT 3697.T rose 9% to be the Nikkei's biggest percentage gainer, while IT consultancy BayCurrent 6532.T up 5.9%. Sony 6758.T rose 2.6%.