TLDR
- Intel (INTC) and AMD (AMD) notify Chinese clients of major CPU supply shortages with Intel delays reaching six months
- Intel server CPU prices jump over 10% in China as the company rations fourth and fifth-generation Xeon processors
- AMD delivery times extend to 8-10 weeks for certain products as TSMC prioritizes AI chip manufacturing
- China accounts for over 20% of Intel’s revenue as AI infrastructure boom strains entire chip supply chain
- Both companies face production challenges while Intel market share drops to 60% and AMD rises to 20%
Intel and AMD have informed Chinese customers about severe server CPU shortages. The two chip makers sent notifications in recent weeks about extended delivery times.
Intel told some customers to expect waits of up to six months for certain CPUs. The company has accumulated a large backlog of unfulfilled orders. AMD notified clients that delivery times have stretched to eight to 10 weeks for some processors.
Supply constraints have increased Intel’s server product prices in China by more than 10%. Individual customer contracts may see different pricing adjustments. China represents over 20% of Intel’s total revenue.
Intel’s fourth-generation and fifth-generation Xeon CPUs face the most acute shortages. The company is rationing deliveries to manage limited supply. Two sources confirmed Intel maintains a substantial backlog of pending orders.
AI Boom Drives CPU Demand
The shortage stems from rapid growth in artificial intelligence infrastructure investment. Companies worldwide are building data centers and AI systems. This expansion has increased demand for both AI-specific chips and standard computing components.
Memory chip prices continue to rise as supply struggles to match demand. CPU shortages add pressure on companies developing AI technologies. Intel acknowledged the AI adoption surge has created strong demand for traditional computing power.
The company expects inventory to reach its lowest level in the first quarter of 2026. Intel plans to improve supply conditions through the second quarter and remainder of 2026. The company said it is addressing the constraints aggressively.
Manufacturing Capacity Constraints
Intel continues to face manufacturing yield challenges at its production facilities. These issues have limited the company’s ability to increase output. AMD outsources production to Taiwan Semiconductor Manufacturing Company.
TSMC has prioritized manufacturing capacity for AI chips. This focus has reduced available capacity for CPU production. AMD stated it has boosted supply capabilities to handle strong demand.
The company expressed confidence in meeting global customer needs. AMD cited strong supplier agreements and its TSMC partnership as key factors. Both companies dominate the global server CPU market together.
Intel’s market share declined from over 90% in 2019 to approximately 60% in 2025. AMD’s share increased from around 5% in 2019 to more than 20% last year. Major Chinese customers include server manufacturers and cloud providers like Alibaba and Tencent.
Memory chip shortages have compounded the situation. When memory prices began rising late last year, customers accelerated CPU purchases. This buying behavior aimed to lock in lower memory prices.
Agentic AI Increases Power Requirements
Advanced agentic AI systems require more CPU processing power than basic chatbots. These systems perform complex multi-step operations. Growth in agentic AI applications has further strained CPU supply.
AMD reiterated its January earnings call statements about expanded supply capabilities. The company maintains it can meet customer demand through its supply chain partnerships. Intel flagged CPU supply constraints during its January earnings call.
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