* KOSPI triggers trading curb after 7% plunge

* Taiwan stocks down as much as 2%

* Jakarta stocks up 1.6%

* Indonesia's rupiah hovers near 18,000 per US dollar

By Roshan Thomas

July 2 (Reuters) - AI-heavy equity markets in South Korea

and Taiwan retreated on Thursday, with the former dropping as

much as 7% as investors rotated out of chipmakers on concerns

about excess capacity after a strong quarter.

South Korea's KOSPI, home to many companies tied to

the AI infrastructure buildout, tumbled as much as 7% to trigger

a "sidecar" trading curb before recovering to a drop of about

5%. Chipmakers Samsung Electronics and SK Hynix

lost 6.4% and 7.8% respectively.

Investor sentiment towards AI-related stocks in Asia soured

after media reports said Meta Platforms ( META ) had plans to

sell access to its AI computing power and models, fuelling

concerns that the company may have overbuilt capacity.

Sentiment was also dented by media reports that Apple was

considering sourcing memory chips from two Chinese

manufacturers, a move that could challenge South Korean

chipmakers.

Taiwan stocks also dropped more than 2%, dragged

lower by chipmaker TSMC, which fell 1.8%. Later the

index was down less than 1%.

Investors welcomed signs of progress in indirect talks

between the U.S. and Iran after Qatar said negotiations centred

on the Strait of Hormuz had advanced, calming fears of

disruptions to the vital oil shipping route.

Markets also took heart from comments from Federal Reserve

Chair Kevin Warsh and other policymakers pointing to a more even

inflation outlook.

Focus now shifts to U.S. non-farm payrolls data as investors

seek fresh clues on the interest-rate outlook after Warsh damped

expectations of a July hike. The data is due out on Thursday due

to a U.S. holiday on Friday.

Moves in regional currencies were muted against a broadly

unchanged dollar index. The rupiah remained pinned

near the 18,000-per-dollar level for a second consecutive

session, while stocks gained 1.6%.

"Sentiments also benefited from the government's moves to

improve banking system liquidity to encourage credit growth and

a decision to scale back allocations towards the flagship meals

programme," DBS economist Radhika Rao said.

Philippine equities advanced 1.2%, while the peso

was flat. Malaysia stocks added 0.4%, while the

ringgit advanced 0.2%.

In Tokyo, Japanese officials are abandoning their habit of

telegraphing intervention risks, Reuters reported, in favour of

a more targeted approach designed to squeeze speculators and

make bets against the yen more costly.

The yen was last trading near 162.42 per U.S. dollar.

HIGHLIGHTS:

** Indonesia's 1-year benchmark yield at 7.933%

** Vietnam central bank says global risks complicate

policymaking

** South Korea's inflation rate quickens to 2-1/2-year high

Asia stock indexes and currencies at 0412 GMT

COUNTRY FX RIC FX FX YTD% INDEX STOCKS STOCKS

DAILY% DAILY% YTD%

Japan +0.10 -3.54 -1.43 37.99

China +0.05 +2.99 -0.90 2.68

India +0.30 -5.36 0.44 -7.73

Indonesia -0.31 -7.31 1.65 -33.05

Malaysia +0.22 -0.66 0.37 -1.02

Philippines +0.04 -4.51 1.21 1.48

S.Korea -0.11 -7.30 -4.83 87.52

Singapore +0.07 -0.71 0.38 11.52

Taiwan +0.05 -1.32 -0.60 61.37

Thailand +0.15 -5.53 0.45 26.65