Leading US chipmaker Intel has once again released disappointing financial results, posting a loss in the second quarter of this year, marking its second consecutive quarterly loss. Accompanying this loss was a 26% plunge in its share price, wiping out its market value of over US$100 billion. Intel, which once dominated the global chip market for 24 years, now appears to be in dire straits.

As a leading US chipmaker, Intel's business primarily consists of two segments: PC processors and server chips. Server chips are Intel's primary source of profit, but this segment is currently under US restrictions, preventing Intel from selling high-end server chips to Chinese companies.

This US action has compounded Intel's difficulties. Since taking office, Intel's new CEO, Pat Gelsinger, has been committed to accelerating advanced process development, announcing a four-year plan to simultaneously develop four process nodes, aiming to achieve Intel's 18A process by next year, surpassing TSMC's 2-nanometer process.

Under such circumstances, Intel undoubtedly needs to invest significant funds in research and development. However, with server chips, its main source of profit, heavily restricted by the US, Intel's revenue has declined, and its profits have turned from last year's earnings to losses. To control costs, Intel has announced another 15% reduction in staff, highlighting its precarious position.

As Intel further controls costs, it has also announced a delay in the mass production of its planned US$100 billion factory in Ohio, expected to be at least two years. This is undoubtedly a significant blow to the US chip manufacturing plan and could impact the US's ambition to regain global leadership in chip technology.

The US was once the world's largest chip manufacturer, with technology leading globally, and Intel was the epitome of US chip manufacturing. For 30 years, Intel led the global technological direction in chip manufacturing, until the 14-nanometer process in 2014.

After Intel mass-produced the 14-nanometer process in 2014, its subsequent advanced process development stagnated, unable to upgrade processes as frequently as in previous years. In contrast, TSMC maintained a pace of upgrading processes every 1-2 years, mass-producing 16-nanometer chips (equivalent to Intel's 14-nanometer) in 2015 and establishing its leadership over Intel with the 7-nanometer mass production in 2018.

Since TSMC's 7-nanometer mass production, Intel has repeatedly accused TSMC and others of playing numerical games, claiming that their 10-nanometer process has a higher transistor density than TSMC's 7-nanometer process. Nevertheless, Intel quickly changed its naming convention for advanced processes, introducing names like Intel 4, Intel 20, and Intel 18A.

To regain technological superiority in advanced processes, the US has employed a carrot-and-stick approach, forcing Samsung and TSMC to set up factories in the US. Ultimately, the US aims to help Intel regain its advanced process advantage. This year, the US even forced a lithography giant to allocate six out of ten 2-nanometer EUV lithography machines to Intel, aiding Intel in achieving its 18A process next year and potentially overtaking TSMC.

At a time when Intel needs to earn more money to support chip process development, the US is preventing Intel from selling high-end server chips to China, compounding Intel's difficulties. With layoffs and delays in new factory production, there are now more uncertainties surrounding Intel's ability to mass-produce its 18A process next year.

While TSMC plans to mass-produce its 2-nanometer process next year, Intel, in a precarious position, may not be able to do so. The US plan could well fail, indicating that the US's restriction on Intel and other US chip companies from selling advanced chips to China is shooting itself in the foot. As a result, the US's plan to regain chip leadership may also collapse.