Intel and AMD have informed Chinese customers of server central processing unit (CPU) supply shortages, with Intel warning that lead times could be up to six months, according to people familiar with the matter. One of the people said the tight supply situation has led to a general price increase of more than 10% for Intel's server products in China, although the exact price will vary depending on customer contracts.
Investment in AI infrastructure continues to grow, triggering a large-scale demand boom for AI-specific chips and products in other parts of the supply chain. The most prominent one is the field of memory chips, whose prices continue to soar.
According to sources, these notices to Chinese customers were sent out in recent weeks, indicating that the CPU shortage problem has become increasingly serious. This could create greater challenges for AI companies, as well as numerous other manufacturers.
In the Chinese market, which accounts for more than 20% of Intel's total revenue, Intel's fourth- and fifth-generation Xeon processors are particularly in short supply, and the company is implementing limited supply, according to two people familiar with the matter.
They added that Intel has a severe backlog of orders for these models and delivery times can be up to six months.
Sources said that AMD has also informed customers of the supply constraints, and the delivery cycle of some products has been extended to eight to 10 weeks.
Intel, which mentioned constrained CPU supply during its earnings call in January, said in a statement that the rapid adoption of artificial intelligence has led to strong demand for "traditional computing."
The company expects "inventory levels to be at their lowest in the first quarter, but we are responding proactively and expect the supply situation to improve by the second quarter of 2026," the statement said.
AMD reiterated during its earnings call that it had ramped up supply capabilities to cope with strong demand.
"Based on our strong supplier agreements and supply chain, including cooperation with TSMC, we remain confident in meeting the needs of our customers around the world," the company said in a statement.
It is reported that the CPU shortage stems from a variety of factors.
Intel has struggled to increase production as its manufacturing yields continue to face challenges. AMD outsources production to Taiwan Semiconductor Manufacturing Co., Ltd., the world's top foundry, which prioritizes the production of AI chips, resulting in limited CPU production capacity.
In addition, a shortage of memory chips, also a key component of servers, is exacerbating the supply shortage. According to a third source, a distributor that sells both server CPUs and memory products, when memory prices began to rise in China late last year, customers accelerated their CPU purchases to lock in lower memory prices.
Surging demand for intelligent AI systems that can perform complex multi-step operations rather than just simple chatbot functions has further exacerbated supply constraints. These advanced applications require significantly more CPU processing power than traditional workloads.