The Nikkei 225 index closed down 1.2% at 42,188.79 points. Korea's Kospi index fell 1.4% to close at 3,142.93 points.

Japanese stocks hit a three-week low during trading as chip stocks declined sharply, influenced by Friday's tech-led selloff in US markets. The Nikkei index dropped more than 2% at one point to 41,849.82 points, having earlier touched 41,843.96 points - its lowest level since August 8th. More than half of the Nikkei's 869-point decline was attributed to two heavyweight stocks: chip testing equipment manufacturer and NVIDIA supplier Advantest fell 9.1% or 280 points, while AI-focused startup investor SoftBank Group dropped 6.3% or 202 points.

NVIDIA tumbled 3.3% on Friday, marking its second consecutive day of declines following disappointing earnings results released after Wednesday's close. The Philadelphia Semiconductor Index fell over 3% on Friday.

As enthusiasm for electric vehicle manufacturer Tesla Motors wanes and interest in cryptocurrency rises, Korean retail investors are losing confidence in Tesla Motors stock, with selling pressure intensifying last month. Investors are turning to more volatile investments, such as Bitmine Immersion Technologies Inc., viewed as an Ethereum proxy, which attracted $253 million in net inflows. This indicates waning enthusiasm among Tesla Motors' most loyal global retail investor base, whose buying frenzies once amplified the stock's rallies. Korean traders, long attracted to prominent US tech companies like Tesla Motors, are now redirecting their funds elsewhere.