Intel (NASDAQ:INTC) shares set a fresh 52-week high in early September, then the stock price hovered in the mid-$30s range for several weeks.

But things very quickly turned sour for Intel investors, including yours truly. The stock has lost 10% of its value in October. So what's wrong with Intel these days?

INTC data by YCharts.

It's a tale in two strange parts.

In early October, fellow semiconductor maker Microchip Technology (NASDAQ:MCHP) reported preliminary second-quarter sales. It was a weak figure, about 4% below the midpoint of management's own guidance.

These things happen, and the damage from soft reports is usually contained to the company issuing the weak figures. But not this time, because Microchip's management stepped up on its soapbox with a chilling message for the industry at large.

"The month of September is usually a strong month for our revenue after the summer holiday period," said Microchip CEO Steve Sanghi. "This time, the September sales did not materialize to our expectations."

What is holding Microchip's sales back in a traditionally strong sales season? Nothing less than an industrywide recession, according to the company.

"Microchip often sees the turn of the industry ahead of others in the semiconductor industry," Sanghi said. "We believe that another industry correction has begun and that this correction will be seen more broadly across the industry in the near future."

Semiconductor investors took Sanghi's word as gospel. The next day, share prices plunged across the entire industry. Microchip took a bigger beating than most of its peers, falling 12% by the end of the day. But Texas Instruments (NASDAQ:TXN) shares fell 9%, and Intel experienced a 5% haircut.

That's an impressive feat, considering how much smaller Microchip is than these industry behemoths.

Over the last four quarters, Microchip collected $2 billion in total sales, next to Texas Instruments' $12.6 billion and Intel's $55 billion. In market terms, Microchip is a solid midcap stock with a $7.8 billion market cap. That amounts to 16% of TI's market value, or 5% of Intel's. In other words, Intel's 5% single-day price drop erased as much market value as removing Microchip's shares altogether.

But for whatever reason, investors trusted Microchip's crystal ball that day. If you believe Microchip holds a unique market position that allows it to forecast industry trends before others see them, this market-moving moment makes sense. Microchip's management certainly thinks so, anyway.

Source: Intel.

Part two: Intel's report
The next week, the Intel story took an even stranger turn.

Intel reported third-quarter results. The company beat analysts' earnings targets and followed up with next-quarter guidance that was slightly above Wall Street's projections.

This raised guidance flew in the face of Microchip's industry outlook and the larger company has stood by its view.

"Have we been seeing something like the Microchip results?" said Intel CFO Stacy Smith in the earnings call. "We're not seeing anything unusual out there. So again, this is not a surprising forecast for Q4, it's kind of seasonally up on the back of a more or less seasonal Q3."

Intel CFO Stacy Smith. Source: Intel.

In other words, Intel saw nothing other than normal seasonal patterns in its most recent quarter, and expects nothing else in the coming quarter. In the larger semiconductor company's view, there's nothing structurally wrong with the current market -- regardless of what Microchip's management said earlier.

So you might have expected Intel shares to recover a bit, based on this report. We're talking about strong results, a healthy near-term outlook, and a rebuttal of the negative industry forecast that Microchip brought to the table.

If that all was not enough, analysts gave Intel's report a pretty clean bill of health. At least four Wall Street firms increased their Intel price targets while keeping their neutral or positive ratings on the stock unchanged.

Only one firm issued a negative opinion, but that happened to be analyst powerhouse Morgan Stanley. Citing "limited upside" and concerns about rising Intel inventory in distribution channels, this single "sell" downgrade and $30 price target outweighed all the good news and optimistic analysis. Intel shares plunged as much as 6% the next morning.

So it's one sweeping industry forecast and one analyst voice against Intel's strong numbers and optimistic outlook. The Intel pessimists are winning in October.

The stock has retreated from a 17 price-to-earnings ratio last month to 15 now. If you're buying into Microchip's gloomy view of where the semiconductor market is headed, Intel's low P/E becomes a dangerous value trap. On the other hand, I'm siding with the many analysts who believe Microchip's forecast doesn't apply to Intel's markets. From this perspective, I'm comfortable holding my Intel shares until Mr. Market comes back to his senses.