Foreign media reveal that Intel has notified Chinese customers of CPU supply shortages

According to Reuters on February 6, sources familiar with the matter revealed that Intel and AMD have notified Chinese customers of a supply shortage of their server central processing units (CPUs). Intel also warned that future delivery times could extend up to six months.

An insider said that supply tightness has caused the prices of Intel server products in the Chinese market to generally increase by over 10%, although specific prices may vary depending on customer contract terms.

The report states that increasing investments in AI infrastructure have not only sparked a rush to purchase AI-specific chips but also driven a surge in demand across other supply chain segments—most notably memory chips, whose shortages are most prominent and prices continue to soar. The sources indicated that these recent notices to Chinese customers were issued in the past few weeks, suggesting that the CPU shortage has worsened. This could pose greater challenges for AI companies and many other manufacturers.

Two other insiders mentioned that the Chinese market accounts for over 20% of Intel’s total revenue, and the supply of its fourth and fifth generation Xeon CPUs is particularly tight, with Intel implementing a quota system for deliveries.

They added that backlogs of orders for these types of CPUs are severe, with delivery times extended to as long as six months.

Another source stated that AMD has also informed customers of supply constraints, with some AMD products experiencing delivery delays of 8 to 10 weeks.

Intel previously indicated during its January earnings call that CPU supply was limited. In a statement to Reuters, the company said that the rapid proliferation of AI has led to a surge in demand for “traditional computing.”

The statement read: “We expect inventory levels to be at their lowest in the first quarter, but we are actively taking measures to address this, and we anticipate supply conditions will gradually improve from the second quarter through 2026.”

AMD reaffirmed its stance from the earnings call, stating that it has increased its supply capacity to meet strong market demand. The company told Reuters, “Based on our strong supplier agreements and supply chain relationships with partners like TSMC, we are confident in our ability to meet customer needs worldwide.”

A UBS report released in January showed that Intel and AMD jointly dominate the global server CPU market. In 2019, Intel held over 90% of the market share, which had decreased to about 60% by 2025; meanwhile, AMD’s market share grew from around 5% in 2019 to over 20% last year.

In the Chinese market, customers of both companies include major server manufacturers and cloud service providers such as Alibaba and Tencent.

Additionally, the report notes that, besides the strong demand driven by AI, server CPU shortages may also stem from various other reasons.

For example, Intel has been plagued by persistent yield issues, making it difficult to expand capacity. Although AMD outsources production to TSMC, the latter has prioritized capacity for AI chip manufacturing, leaving limited resources for CPUs.

Furthermore, shortages of memory chips—key components of servers—have also contributed to the supply crunch. Distributors of server CPUs and memory products reported that after memory prices in China began rising at the end of last year, customers accelerated CPU procurement to lock in lower memory prices.

The surge in demand for AI systems, capable of executing complex multi-step operations beyond simple chatbots, has further intensified supply tensions. These advanced applications require CPU processing power far exceeding traditional workloads.

This article is an exclusive report by Observer News and may not be reproduced without permission.