(Updates at 0600 GMT)

TOKYO, Oct 16 (Reuters) - Japan's Nikkei share average

snapped a four-session winning streak on Wednesday, as

chip-related stocks tracked an overnight drop in U.S. peers

following demand concerns, with Tokyo Electron ( TOELF ) slumping more

than 9%.

The Nikkei ended 1.83% lower at 39,180.3 points,

after crossing the 40,000 level to touch a three-month high in

the previous session.

"The Nikkei's declines reflected the index's sharp gains in

the recent rally," said Seiichi Suzuki, chief equity market

analyst, Tokai Tokyo Intelligence Laboratory.

"After all, the market sentiment is not that strong partly

because of the yen's strength against the dollar from three

months ago."

The yen was at about 149 yen against the dollar in

Asian trade, compared with around 160 yen in mid-July when the

Nikkei hit a record peak.

Wall Street's major stock indexes closed lower on Tuesday,

with the technology-heavy Nasdaq leading declines after a 1%

drop, as chip stocks came under pressure.

U.S. semiconductor stocks slumped after chip equipment maker

ASML cut its annual sales forecast over weak non-AI

chip demand, while a report said the Joe Biden administration

was considering capping sales of advanced artificial

intelligence processors to some countries.

Chip-making equipment maker Tokyo Electron ( TOELF ) ended

9.19% lower to track a 5.3% overnight drop in the Philadelphia

SE Semiconductor index.

Technology investor SoftBank Group fell 3.97% and

microchip equipment maker Lasertec ( LSRCF ) tanked 13.44%.

The broader Topix fell 1.21% to 2,690.66, with a

phone company NTT rising 0.82% to provide the biggest

support to the index.

Insurers MS&AD Insurance Group and Tokio Marine

Holdings ( TKOMF ) rose 1.26% and 0.05%, respectively.

The insurance sector climbed 0.35% higher to

become the best performer among the Tokyo Stock Exchange's 33

industry sub-indexes.

Topix's growth stock index, which includes

high-flying technology stocks, fell 1.75%. The value shares

index, which tracks stocks with slow growth but higher

dividend payouts, slipped 0.67%.