no safety in isolation
intel attends the fifth china international import expo in shanghai, on november 9, 2022. (photo: vcg)
by gong qian
it is a dark financial time for intel, the u.s. semiconductor giant. on january 26, intel released its dismal financial results: a 32 percent year-on-year revenue decline for q4, and a 20 percent decline in annual revenue. the company later saw about eight billion usd wiped off its market value.
"no words can portray or explain the historic collapse of intel," hans mosesmann, senior research analyst from rosenblatt securities, told reuters.
a few days later, south korean tech giant samsung published a statement to reveal its earning results for 2022. its fiscal revenue fell eight percent and operating profit plummeted in q4, down 69 percent from a year ago, the worst result since the third quarter of 2014. the chip unit was the hardest hit, with its operating profit plunging 97 percent.
the two leading chipmakers explained that such a decrease was largely attributed to a significantly deteriorated business environment with a growing weak demand amid a global economic slowdown.
in reality, intel's bleak earnings may have something to do with its loss in the chinese market.
in a phone interview with barron's, intel cfo david zinsner confirmed its business in china was the weakest region relative to initial expectations for the fourth quarter.
according to tech research and consulting company gartner, intel's fourth-quarter global pc shipments declined at a rate of 28.5 percent, making it the biggest decline the company ever recorded since it tracked device shipments in the mid-1990s. as a result, its revenue from client computing group, the pillar service, was crushed.
china overtook the u.s. to become the largest pc market in the world in 2011. the country has also been intel's biggest market for years. revenue from billings to china (not including china's taiwan) contributes 27 percent of its total revenue, intel said in its 2022 annual report. but its net revenue from china saw a 25 percent decrease from a year ago.
in particular, intel admitted it was subject to trade tensions between the u.s. and china. the company said, those restrictions on the export of u.s.-regulated products and technology to certain chinese technology companies imposed by the u.s. have reduced their sales. continuing or future restrictions could adversely affect their financial performance, resulting in reputational harm to them, or lead such companies to develop or adopt technologies that compete with their products.
samsung attributed its sharp decline in chips to "overall memory chips demand weakened as customers continued to adjust their inventories amid deepening uncertainties in the external environment."
similarly, another memory chipmaker, sk hynix, also reported its biggest quarterly loss on record, hammered by a historic chip industry slump, said bloomberg.
micron technology, the largest u.s. maker of memory chips, said the worst industry glut in more than a decade will make it difficult to return to profitability in 2023, bloomberg reported.
the situation, then, becomes ironic. for one thing, these semiconductor giants blame their disappointing performance on a large imbalance between supply and demand. for another, the u.s. has been putting pressure on both domestic companies and its allies to impose export restrictions on chips to china - the largest semiconductor chips importer in the world.
so who is to be blamed for the shattering of the global semiconductor industry chain? the answer to the question is obvious.
amid the global economic downturn due to the pandemic, no one can stay safe on their own. only through full cooperation can countries tackle the common challenge.
