Japan's Nikkei falls for second day on lower chip shares

By Rocky Swift

TOKYO, Aug 20 (Reuters) - Japan's Nikkei share average slid for a second day on Wednesday, coming off of record highs and dragged lower by chip-related companies.

SoftBank Group 9984.T plunged 7.6%, while Advantest 6857.T, a maker of chip-testing equipment, lost 6.1%.

The losses came after the tech-heavy Nasdaq sank in U.S. trading overnight, with Nvidia NVDA.O sliding 3.5%, the biggest drop in nearly four months.

The U.S. government wants an equity stake in Intel in exchange for cash grants approved during the previous administration, Commerce Secretary Howard Lutnick said on Tuesday. That comes on the heels of SoftBank's $2 billion investment in the struggling U.S. chipmaker that was announced on Monday.

"Concerns about government intervention in the semiconductor sector could weigh on U.S. high-tech stocks and, by extension, Japanese semiconductor-related shares," said Nomura strategist Fumika Shimizu.

The Nikkei 225 Index .N225 lost 1.7% to 42,791.13. The broader Topix .TOPX gauge fell 0.8%.

Lutnick also said that documents memorializing trade agreements with Japan and South Korea are "weeks away" from being ready. Under the deal reached last month, the U.S. agreed to reduce tariffs on Japanese car imports to 15% from the previous 27.5%, and Japan promised $550 billion in U.S. investments.

The trade deal appears skewed to benefit Japan's major exporters over companies that will make up the bulk of those investments in America, said Weston Nakamura, a markets analyst who publishes the Across the Spread newsletter.

"SoftBank, and whoever else invests in what the U.S. government deems as a strategic national interest, is 'subsidizing' the lower tariff rate for autos," he said.

Automaker stocks were broadly higher, with Honda Motor 7267.T rising 1.4% and Isuzu Motors 7202.T adding 1%.

The Nikkei will likely ease off recent record highs toward year-end, according to strategists in a Reuters poll.

The index on Tuesday surpassed last week's previous intraday record to touch 43,876.42. It is forecast to slip back to 42,000 at the end of December, according to the median estimate of 18 analysts polled August 8-18.