South Korea's KOSPI plunged more than 6 percent shortly after the open, sliding to the 7,800 level. Heavy selling hit major chip stocks such as Samsung Electronics and SK Hynix after a sharp fall in U.S. semiconductor shares, triggering a sell sidecar in the main board market.

As of 9:28 a.m. on July 2, the KOSPI was down 509.70 points, or 6.14 percent, at 7,793.71. The index opened down 370.31 points, or 4.46 percent, at 7,933.10 and fell as low as 7,758.27.

The Korea Exchange triggered a sell sidecar for the main board market at 9:07 a.m. It was the 30th sidecar activation this year. Sell sidecars and buy sidecars have each been triggered 15 times.

According to the exchange, the mini KOSPI200 futures fell 6.05 percent to 1,255.94 at 9:07:03 a.m. from the reference price of 1,336.86. Program trading sell orders were suspended for 5 minutes.

In the main board market, individuals and institutions were net buyers of 1.5857 trillion won and 397.9 billion won, respectively. Foreigners were net sellers of 2.0213 trillion won.

Most top market-cap shares were weaker. Samsung Electronics was down 22,250 won, or 7.07 percent, at 292,250 won. SK Hynix fell 212,000 won, or 8.28 percent, to 2,348,000 won.

SK Square fell 9.96 percent, Samsung Electro-Mechanics slid 9.71 percent and Hyundai Motor dropped 4.92 percent. LG Energy Solution fell 1.72 percent, Samsung Life slipped 7.11 percent, Samsung C&T dropped 7.37 percent and Samsung Biologics fell 2.44 percent.

The KOSDAQ also weakened. At the same time, the KOSDAQ was down 44.65 points, or 4.80 percent, at 884.70.

The won was trading at 1,555.40 per dollar in early trade, up 2.90 won, or 0.19 percent, from the previous session. The rising exchange rate and foreign selling are adding to downside pressure on the stock market.

Han Ji-young (한지영), a researcher at Kiwoom Securities, said the spillover from a roughly 6 percent drop in the Philadelphia Semiconductor Index due to "metaverse noise" is set to add downside pressure to domestic chip stocks and lead to a weaker open. He added that the KOSPI's second-quarter earnings momentum has not been damaged and that attention is needed on rotation into other sectors such as power equipment, defense and biotech.