Stock markets in Japan and South Korea plunged Thursday as a sell-off in chip and artificial intelligence stocks spread across Asia, The Japan Times and CNBC reported.

Japan's Nikkei 225 closed down 4.9% at 64,425.95, The Japan Times reported. It fell 3,318.34 points, the third-biggest point drop ever, the paper reported. South Korea's Kospi fell 7.5%, the paper reported.

Chip-related stocks were hit hardest. SK Hynix fell more than 10%, CNBC reported, and Samsung Electronics fell about 9%, both outlets reported. In Japan, chip testing equipment maker Advantest dropped about 14%, CNBC reported. SoftBank Group and Tokyo Electron also fell sharply.

The 20 most valuable AI and chip stocks around the world have lost more than $1 trillion in market value so far this week, CNBC reported. Investors are worried that higher interest rates could make it harder to pay for the huge cost of building AI data centers, the network reported.

Concerns about a possible oversupply of memory chips as soon as 2029 also weighed on stocks, CNBC reported. A Chinese memory maker, CXMT, said over the weekend it had made a breakthrough in chip design, the network reported.

Higher oil prices added to the gloom, with Brent crude above $100 a barrel, The Japan Times reported. Bonds gained as investors grew more cautious, and the yield on Japan's 10-year government bond briefly fell to 2.91%, the paper reported.

The Nikkei is now more than 10% below its June record high of 72,831.73 but still up 35% over the past year, The Japan Times reported.

The U.S. Federal Reserve meets on Oct. 27 and 28, The Japan Times reported.

What we know: The Nikkei fell 4.9% and the Kospi 7.5% as chip stocks plunged across Asia.
What we don't: Whether the sell-off will deepen before the Federal Reserve meets later this month.