In the world of high technology, few narratives are as compelling as the dramatic rise and fall of major players in the semiconductor industryLast August, Ren Zhengfei, the founder of Huawei, made a bold proclamation during an internal meeting, remarking that the "chill must reach everyone." Little did he know how prophetic his words would turn out to be, especially for American chip giant Intel.

Intel has long been a powerhouse in the semiconductor field, renowned for its innovation and dominanceIt introduced the first-ever microprocessor, the 4004, in 1971, a groundbreaking development that revolutionized computing and set the standard for the industryHowever, Intel's recent performance has been nothing short of catastrophicAfter revealing its fourth-quarter and full-year results for 2022, Intel found itself trapped in a financial quagmire, characterized by what many media outlets labeled a "disaster-level" earnings report.

Dissecting the figures from Intel’s latest financial statement shows a startling downturn

The company reported revenues of only $14 billion in the fourth quarter, marking its lowest quarterly income since 2016, and a staggering 32% decline year-over-yearEven more alarming, its net profit plummeted to $4.6 billion—a dramatic 114% dropFor a company that has consistently sought to capture a larger slice of the market dominated by competitor TSMC, such losses are akin to a performer struggling to find their footing on stage.

Moreover, examining Intel's entire financial year reveals an equally troubling narrativeThe company recorded total revenues of $63.1 billion, a 20% decrease compared to the prior year, and an annual net profit of $8 billion, plummeting 60% from 2021. This indeed illustrates that Ren Zhengfei's forecasts were more than mere speculation; Intel became an early casualty of a larger market downturnNevertheless, Intel is not alone in this turmoil

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Other giants in the industry, including AMD, Nvidia, and Qualcomm, have also seen significant declines that exceeded expectations.

Interestingly, Intel's financial struggles are not a surprise to analysts who have closely followed recent developmentsThe United States government has enacted multiple rounds of chip restrictions aimed at curbing China's technological advancements, mimicking a narrative akin to science fiction where a dystopian future looms largeThe U.Smandates have aimed to curtail mainland China's semiconductor capabilities while prodding companies like Samsung, TSMC, and ASML to align their strategies with American interestsWhile these measures may have yielded short-term benefits for the U.S., fears linger over the potential long-term ramifications of alienating a significant global consumer market, namely China.

The COVID-19 pandemic exacerbated the challenges faced by these tech titans, thrusting the semiconductor market into an unprecedented downturn

With semiconductor demand hitting an all-time low, the once-thriving sector seemingly plunged into a winter of discontent overnightIntel and its American counterparts had historically profited immensely from market strategies that monopolized technological and patent advantages, often resulting in massive gains from the Chinese marketThis time, however, the loss of access to the world’s largest consumer market has become glaringly evident, providing a more understandable context for their stark financial reports.

Ren Zhengfei, a visionary leader, seemingly foresaw such a scene unfolding: he predicted that there would come a day when American companies would be begging China to purchase their chipsThe irony is that when that day comes, it would not be a matter of scarcity—rather, it would be an issue of refusalAs time progresses, signs suggesting that this foresight is becoming reality are emerging: Dutch company ASML has become embroiled in a complex situation with the U.S.; Qualcomm announced ongoing price reductions for its chips this year; Huawei is advancing in quantum chip technology to reduce dependence on lithography equipment; and Longji Technology has successfully produced 4nm chips for international clients.

In parallel, Leung Cheung, a prominent businessman with deep ties to Hong Kong, has also stepped into the arena of revitalizing domestic semiconductor technology

Despite being at the age of 95 and faced with criticism for his sidesteps into health technologies, his recent investment activities have garnered attentionThe shift away from Canadian citizenship has positioned him to reinvigorate his status as a significant player in the domestic market, with his focus on the semiconductor industry being a key part of that narrative.

Recent reports reveal that in October of last year, Leung's company, Wi Harbour Investment, contributed $48 million to a semiconductor startup called NaimensHowever, few are aware that it was the astute businesswoman Dong Mingzhu who first recognized Naimens’ potentialAdvocating for a collaboration between local and international entities, she opined, “No matter how well you do in the United States, it ultimately contributes core technology to another nationYou come to China; I can help you.” True to her word, Naimens is now supplying chips to Gree, a well-known brand, which has led to an impressive valuation growth to approximately $5.5 billion.

Leung’s previous ventures have already yielded significant returns

For instance, his investment in the health technology company Zhuhongkangchun boasts remarkable advancements backed by research that revealed the ability to rejuvenate cellular componentsHe pursued this venture with vigor, investing $20 million as a statement of his commitment to this promising domain, which subsequently paved the way for a booming marketplace worth billions.

To date, he has injected funding into Naimens through three rounds of investments, underscoring his keen insight into the burgeoning wave of domestic semiconductor technology replacementsThe results of such investments are already becoming apparent: during the last year, China achieved explosive growth in domestic chip production, reaching a daily output of 100 million chipsIn contrast, there has been a significant reduction in imported chips from the U.Sand South Korea, equating to a staggering drop of 20 million units per day

This evolution signifies a new era for China's semiconductor industry, provoking commentary from American media lamenting, "We accomplished a blockade to no avail."

Yet, the twilight for the likes of Intel appears far from overExternal predictions suggest that the decline in PC shipments, which comprises over 50% of Intel's total revenue, will persist into 2023, with prospects for recovery delayed until 2024 at the earliestAs a consequence, the outlook remains grim for the beleaguered giantMeanwhile, international observers are actively urging China to take the reins in this turbulent landscape.

However, readers may ponder whether the United States may emulate fictional characters from dark science fiction by believing they hold all the solutionsThe state of affairs in the semiconductor arena presents a narrative filled with twists and surprises, and the question remains: who will ultimately control the future of the chip industry?