The key semiconductor industry, which powers everything from personal computers to smartphones to fighter jets, suffered a dismal first quarter as demand for chips plummeted.
Intel announced last Thursday that sales in the first quarter of 2023 fell sharply due to a sharp drop in demand for semiconductors, especially for PCs.
Rising prices, a global glut of chips and poor demand for hardware also punished rival Samsung Electronics, which posted its worst quarterly profit in 14 years early on Thursday.
Intel's revenue fell 36 percent in three months to $1.1 billion, and the semiconductor giant lost $700 million, its biggest loss in a quarter.
The loss and sales collapse was slightly less catastrophic than expected, and the stock rose 3% in after-hours trading.
"Intel relies heavily on the PC market, and since we still seem to be seeing a slowdown in the PC market, especially for consumer PCs, I expect challenges for Intel," said Gartner analyst Alan Priestley.
Intel is one of the world's leading semiconductor manufacturers, producing a wide range of products, including the latest generation of chips as well as TSMC in Taiwan and Samsung in South Korea.
It has also been affected by declining demand for data center chips and is struggling to compete with Nvidia to prop up semiconductors that underpin ChatGPT-style generation of AI, a major emerging chip-hungry area in the industry.
In South Korea, Samsung Electronics' chip division reported a loss of 515.804 billion yuan ($74.62009 billion), its first operating loss since 2008 — when the world was emerging from a financial crisis.
The chip industry — which also serves the military or increasingly connected home appliances — is known for its volatility, seesaw demand and supply as the world economy troughs and rises.
The central role in global supply chains became clear at the height of the pandemic.
Lockdowns and health restrictions have reduced production outside of Asia, leaving surging demand for chips unmet just as everyone turns to online work, shopping and entertainment.
The materials needed to make chips are often hard to come by, and there is domestic anger over Washington's efforts to thwart its ability to compete in the field.
Taiwan's Semiconductor Manufacturing Corporation (TSMC) operates the world's largest silicon wafer fab and produces some of the most advanced microchips for use in everything from smartphones and cars to missiles.
Its first-quarter sales largely weathered the downturn, managing to keep profits steady, though it warned sales would take a hit later in the year.
TSMC is more resilient to recession, in part because it produces some of the most advanced and smallest chips that are still highly sought after and in short supply.
According to Deloitte, more than 80% of semiconductor manufacturing takes place in Asia, and in the best-case scenario, this will drop to 50% by 2030.
"It's a very intense, competitive ecosystem, and it's only going to get more complex as more of these chips come to market," Gold said.