* KOSPI tumbles to three-month low

* Oil extends losses but yields steady

* Fed meeting is live, pricing implies 38% hike risk

SINGAPORE, July 28 (Reuters) - Asian markets fell on Tuesday

led by chipmakers on unease about the massive funding demands of

the AI boom, while a slide in oil prices did relatively little

to lift bonds and left traders nervous about U.S. rate hikes,

maybe as soon as this week.

South Korea's KOSPI dived more than 8% to a

three-month low, triggering a circuit breaker, and Japan's

Nikkei slid 4%, following a 2.2% drop for the

Philadelphia Semiconductor index.

Nvidia ( NVDA ) shares shed 5% overnight after the Wall

Street Journal reported the company is in talks to provide

roughly $250 billion in financing guarantees for OpenAI as part

of a massive data centre project.

And the stellar 466% debut-day surge in CXMT Corp

shares in Shanghai highlighted growing investor

enthusiasm for China's semiconductor sector and the rising

competitive threat from Chinese rivals.

"There is clearly a growing sense of optimism within

mainland markets about China's ability to build a globally

competitive AI ecosystem," said Chris Weston, head of research

at Pepperstone.

China has also begun manufacturing domestically developed

immersion deep ultraviolet lithography machines, a chipmaking

tool long dominated by Dutch supplier ASML, The

Information reported on Monday, sending ASML shares down 8.5%.

South Korea's SK Hynix ( SKHY ) fell nearly 11% and

Samsung Electronics ( SSNLF ) shares shed more than 9%, while

in Tokyo some of the heaviest losers were Kioxia ( KXHCF ), down

18%, and Tokyo Electron ( TOELF ), down 9.8%.

Chinese stocks also beat a retreat, with CXMT down 7% in

early trade and chipmaking indexes lower.

OIL SLIDES, US YIELDS DIP

Brent crude futures extended Monday's nearly 9% plunge,

falling to $87.55 a barrel, as a lull in hostilities between the

U.S. and Iran followed Washington's abrupt suspension of air

strikes on Saturday.

President Donald Trump said on Monday the United States was

having "good talks" with Iran and there was a chance of a deal.

The break in fighting pushed down benchmark 10-year U.S.

Treasury yields by about four basis points to 4.64%,

but hardly budged shorter-term rates.

Traders have priced about a 38% chance that the Federal

Reserve hikes by 25 basis points on Wednesday.

"The U.S.-Iran War, by propelling the price of crude oil,

remains the most important determinant of what will happen to

the global economy in the next few months, and, by extension,

what informs central bank policy outlooks, at the margin," said

Thierry Wizman, currency and rates strategist at Macquarie

Group.

"We expect that the (Fed) this week will wish to adopt a

tightening bias."

Expectations for hikes sooner or later kept the dollar

supported, holding the euro below $1.14 at $1.1370 and

the Australian dollar just below 70 cents.

The yen traded at 163.78 to the dollar, barely above

a four-decade low, with markets on edge about Japan intervening

in the currency pair - particularly if the Bank of Japan leaves

rates on hold this week and sets off another yen slide.

"If BoJ communication is not hawkish enough and USD/JPY

heads higher, traders should anticipate an official response,

including verbal intervention, rate checks, or even direct FX

market intervention, perhaps on Friday," said Wizman.