(Adds comments in paragraph 9, details and updates with closing

prices)

By Junko Fujita

TOKYO, July 7 (Reuters) - Japan's Nikkei share average

closed 2% lower on Tuesday as semiconductor-related heavyweights

fell after a drop in South Korea's Samsung Electronics ( SSNLF ) sent the

benchmark KOSPI tumbling.

The Nikkei fell 2.12% to close at 68,256.96.

The broader Topix index ended 0.97% lower at

4,062.26 after hitting a record high of 4,137.62 earlier in the

session, as investors bought financial and other beaten-down

value stocks.

"The market looked into the shares of Samsung Electronics ( SSNLF )

, which fell even as the memory chipmaker's forecast

beat the market forecast," said Kazuaki Shimada, chief

strategist at IwaiCosmo Securities.

Shares of Japan's high-flying memory maker Kioxia ( KXHCF )

fell 11.26% and chip-related Advantest ( ADTTF ) and Tokyo

Electron ( TOELF ) lost 2.25% and 3.94%, respectively.

The tech-heavy Nikkei tends to track moves in South Korea's

benchmark index, which is also heavily weighted toward chip

stocks.

The benchmark KOSPI fell as much as 8%, triggering

circuit breakers for the sixth time this year, as Samsung

Electronics ( SSNLF ) tanked as much as 10%.

The world's largest memory chipmaker on Tuesday forecast a

19-fold jump in second-quarter operating profit from a year

earlier.

"In the short term, investors will keep selling AI stocks to

book profits, but at the same time they are buying undervalued

stocks," said Naoki Fujiwara, senior fund manager at Shinkin

Asset Management.

Japan's banking shares rose, with Mitsubishi UFJ Financial

Group ( MUFG ) up 2.26%. Shares of Mizuho Financial Group ( MFG )

and Sumitomo Mitsui Financial Group ( SMFG ) inched up

0.39% and 0.18%, respectively.

Nomura Holdings ( NMR ) rose 3% to become the top

percentage gainer in the Nikkei.

Toyota Motor ( TM ) closed 0.79% higher.

Of the more than 1,500 stocks trading on the Tokyo Stock

Exchange's prime market, 47% rose, 49% slipped and 2% traded

flat.

(Editing by Sherry Jacob-Phillips)