The split between Tokyo and Seoul suggests rate sensitivity, rather than chip demand alone, is setting the tone. AI-linked names look most exposed where valuations are stretched against rising yields, while Korean memory stocks are supported by a clearer demand story. Oil and yields are rising together, which keeps inflation and policy concerns in the frame, and any progress in US and Iranian mediation could quickly change the energy leg. Micron's results are the next test of whether chip strength can hold.---Earlier from Japan:Japan's Katayama says undervalued yen is problematic, agrees with Bessent on cooperation---Rate and oil worries battered Tokyo's AI-heavy market while Seoul's chipmakers kept the KOSPI afloat, leaving Micron's earnings as the next test for the AI trade.Summary:Japan's Nikkei 225 slid 1.2% in early Tuesday trading, heading for a second straight decline, while the broader Topix fell 1.75%.The selloff followed overnight US equity losses as rising oil prices and Treasury yields stoked inflation worries and fears of tighter-for-longer monetary policy.Japanese government bond yields are hovering near multi-decade highs, adding to domestic pressure.South Korea's KOSPI was little changed, with Samsung Electronics up 1.76% and SK Hynix up 0.51%, while most other heavyweights fell and foreigners sold 941.8 billion won ($692.50 million) of shares.A Samsung executive said high-bandwidth memory is expected to make up nearly 30% of DRAM makers' wafer capacity next year, from about 20% now.Japanese shares fell sharply in early trading on Tuesday as a global rise in bond yields and higher oil prices weighed on sentiment, while South Korean stocks were broadly flat as gains in chipmakers offset weakness elsewhere. The benchmark Nikkei 225 slid 1.2% and was on course for a second straight daily decline, while the broader Topix dropped 1.75%.The moves followed overnight losses on US equity markets, where rising oil prices and Treasury yields stoked inflation worries and raised concern that monetary policy would stay tight. Pressure is also building at home, with Japanese government bond yields hovering close to multi-decade highs. A market strategist said it was fair to conclude that inflation concerns, and the resulting rise in interest rates, were weighing on stocks. The strategist added that AI-related shares, which have been a driving force in the Japanese market, are increasingly seen as relatively overvalued as rates climb.Energy remains a moving part. US and Iranian officials spoke separately with mediators on Monday as part of a renewed effort to end seven months of war that has roiled energy markets. The outcome of that effort is a key variable for oil prices and, by extension, for the inflation and interest rate concerns now pressuring equities.In South Korea, the KOSPI edged lower by less than 0.1%. Foreign investors were net sellers of shares worth 941.8 billion won, or about $692.50 million, and the won weakened against the dollar, while the benchmark government bond yield fell. Samsung Electronics rose 1.76% and SK Hynix gained 0.51%, but most other index heavyweights declined.For readers, Tuesday's session shows how the same AI theme can produce different outcomes depending on rate exposure and valuation. Micron's results, movement in Japanese and US bond yields, and any progress in the US and Iranian mediation effort are the developments most likely to change that picture. One session does not make a trend, so a second day of Nikkei weakness is worth watching against how oil and yields behave. This article was written by Eamonn Sheridan at investinglive.com.