Intel and AMD Face Supply Shortages for Server CPUs, Prices Surge in China

Intel and AMD have informed Chinese customers of supply shortages for server central processing units (CPUs), with Intel warning of delivery lead times of up to six months, according to people familiar with the delays. This has driven up prices for Intel’s server products in China by more than 10%, though pricing varies by customer contract.

The surge in investment in artificial intelligence infrastructure has created a frantic rush across the supply chain, particularly in memory chips, whose prices have continued to soar. These latest notices indicate that CPU shortages are intensifying as well, affecting not only AI companies but also various manufacturers.

In China, which represents more than 20% of Intel’s overall revenue, its fourth- and fifth-generation Xeon CPUs are especially short supply, with Intel rationing deliveries and extending delivery times to six months or longer. The company has a significant backlog for these models, it was reported.

AMD has also notified clients about supply constraints, stating that some products have delivery lead times pushed out to eight to ten weeks, according to one source.

These supply issues in China are being reported for the first time by Reuters. Intel, which flagged CPU shortages in its January earnings call, stated via a statement: “The rapid adoption of AI has led to strong demand for ‘traditional compute’. We expect inventory levels to be at their lowest in Q1 but will address this aggressively and aim to see improvement through 2026.”

AMD reiterated its comments from its earnings call that it has increased supply capabilities to meet the strong demand, saying: “We remain confident in our ability to meet customer demand globally based on our strong supplier agreements and supply chain, including our partnership with TSMC.”

Intel and AMD together dominate the global server CPU market. Intel’s share has fallen from over 90% in 2019 to about 60% by 2025, while AMD’s share climbed from around 5% to more than 20%.

Clients include major Chinese server manufacturers and cloud computing providers like Alibaba and Tencent.

Supply shortages stem from multiple factors. Intel faces challenges with production ramp-up due to persistent manufacturing yield issues. AMD outsources some CPU production to Taiwan Semiconductor Manufacturing Company (TSMC), which has prioritized AI chip manufacturing, leaving limited capacity for CPUs. The shortage of memory chips, a critical server component, further strains supply. When memory prices rose last year in China, customers accelerated their purchase of CPUs to secure lower price points for memory. Additionally, the surge in demand for advanced artificial intelligence (AI) systems with significantly higher CPU processing needs has exacerbated shortages.