Japan's benchmark Nikkei 225 index closed 0.2% lower at 66,131.98 points, dragged down by weakness in electronic gaming stocks. The index opened with gains of 0.8% but gave back those advances by the close, pressured by Advantest, a key supplier to Nvidia, whose shares fell 3.2%.

In a separate development, Kioxia Holdings plans to construct a new chip fabrication facility in northern Japan to expand capacity and meet sustained growth in AI-related memory demand. According to sources familiar with the matter, the Tokyo-based NAND flash memory maker will build its third plant at its manufacturing site in Iwate Prefecture.

The new facility will produce Kioxia's latest high-density 3D flash memory chips, designed to help manage the massive workflows generated by artificial intelligence services. The investment will be undertaken jointly with manufacturing partner SanDisk Corporation. Major global memory chip manufacturers are facing mounting pressure to boost output to alleviate rising electronics costs caused by worldwide memory shortages.

The sources indicated that Kioxia and SanDisk will seek government subsidies from Japan. One of the people said the Japanese chipmaker plans to announce the expansion plan early Thursday evening.