"Black Swan" events have finally arrived! A major U.S. chip company has experienced a financial bombshell, with its market value evaporating by tens of billions overnight, ushering in a winter for the entire chip industry. The chip market has gone from a scarcity of chips to a glut that is unsellable. What exactly has happened? One very important point is that it has a lot to do with our country.
As the leading semiconductor company in the United States, AMD announced its third-quarter revenue, which is about $5.6 billion. This figure is $1.1 billion lower than the already pessimistic revenue forecast midpoint of $6.7 billion, and the gross margin is also declining sharply. We must understand that AMD has been thriving for nearly 50 years, with both revenue and scale continuing to grow rapidly, and a significant decline in revenue is still the first time!
Of course, it's not just AMD that has seen a significant drop in revenue and profits. Samsung Electronics from South Korea announced its third-quarter performance at the beginning of October, showing that the third-quarter estimated operating income is 10.8 trillion won, with operating profit down 31.7% year-on-year, marking the first time in three years that profit has declined year-on-year.
Additionally, earlier on, Micron Technology's financial report showed that in the most recent quarter, revenue decreased by 19.71% year-on-year to $6.643 billion, the lowest since the second quarter of fiscal year 2021; net profit decreased by 45.15% year-on-year to $1.492 billion.
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Due to the sluggish chip market, AMD's stock price plummeted by 13.9% overnight, with a market value evaporation of $15.18 billion, equivalent to nearly 100 billion yuan, with a cumulative decline of nearly 60% for the year, and the stock price returned to the level of two years ago. At the same time, chip companies like TSMC, NVIDIA, and Samsung Electronics have all seen their stock prices plummet, leading to a global loss in the industry's market value of over $240 billion.
So we can't help but ask, why has the chip industry, as one of the most important industries globally, gone from a scarcity of chips to a glut that is unsellable? What exactly has happened? Don't worry, let me tell you the truth behind this bit by bit!
Firstly, it is the global economic downturn, leading to a decrease in demand for the entire chip market.
We must understand that what has happened in the past two years can be said to be the biggest black swan event globally, such as the COVID-19 pandemic, the Russia-Ukraine conflict, and the U.S. dollar interest rate hikes, etc. Under these circumstances, life is not easy for the whole world. Especially with the continuous interest rate hikes of the U.S. dollar, leading to capital inflow and suppressing global consumer demand.
As the global economic recession spread to the technology and chip industries, data from market research institutions show that in the second quarter, global PC market shipments were about 72 million units, a year-on-year decline of 12.6%, the largest drop in nine years.
Let's think about it, electronic products are not necessities, and when everyone is out of money, the first consumption to be cut is electronic products. You might as well look at the fact that the Apple 14 broke even as soon as it was launched to understand this point, which has never happened in the history of iPhone sales!The global economic environment is currently in a downturn, and overseas chip giants from AMD to Samsung, from Micron to SK Hynix, have ushered in a harsh "winter."
Citibank recently released a research report stating that the global chip industry is entering its most depressed period in 10 years.
Secondly, the United States' new export controls on chips to China have led to poor financial performance for semiconductor companies.
In October, the United States introduced a series of new regulations prohibiting the sale of certain chips manufactured using American equipment to China. In addition, the U.S. government added 31 Chinese companies, research institutions, and other groups to the so-called "Unverified List," restricting their ability to obtain certain regulated American semiconductor technologies.
In August of this year, American chip design company NVIDIA stated that it was required by the U.S. government to restrict the export of two of its latest GPU computing chips used to accelerate artificial intelligence tasks to China.
In September of this year, AMD also received a notice from the U.S. government that its M250 chips would be prohibited from being exported to China. Previously, South Korean chip companies were also asked by the U.S. to withdraw from the Chinese market.
According to data provided by the media, if Chinese companies decide not to purchase alternative products provided by NVIDIA, the latter will lose $400 million in sales this quarter.
Let's look at another set of data: over the past decade, the United States has exported chip products to China with an average annual value of over $300 billion, making it its largest overseas market. If the Chinese market is lost, it is feared that global chip companies will face tough times.
This is indeed the case. Since the beginning of this year, the discontinuation of supplies to Chinese companies has led to a large amount of inventory backlog for American chip suppliers. It is an undeniable fact that American chips are highly dependent on the Asian market.
Furthermore, the market crisis for chips has accelerated panic in the American chip market.Due to the United States' control over the export of chips to our country, China has recently included the third-generation semiconductor in the next five-year plan, introducing a series of intense measures and development layout guidance. This will guide a large amount of funds to flow into this industry. Then, Chinese technology companies may experience a boom in semiconductor chips, and this boom is very likely to enable China to have its own chip technology.
When China's chip technology develops, the United States will lose more than just a $300 billion market, but the monopolistic share of the entire chip market. China's efforts in the chip industry have caused panic among investors in the U.S. chip industry, and everyone has started to sell stocks of U.S. chip companies.
Finally, I want to say that the United States' chip control and malicious suppression not only affect the interests of U.S. companies themselves, but also allow our country's chip technology to rise rapidly, promoting the further development of the domestic chip industry chain, which originally had insufficient interaction between upstream and downstream.
I would like to use a Chinese saying to describe the United States' actions: "He who commits many injustices will surely perish."