Both Intel and AMD have warned Chinese customers of delays on server CPU shipments, report says, as AI demand begins to eat into the processor market
Both Intel and AMD have notified Chinese customers of supply shortages affecting their respective server CPUs, according to a Reuters report, with up to a six-month lead time on Intel chips.
While much noise has been made regarding AI GPUs and their effect on the memory market in recent months, server CPUs are also in high demand as the AI boom continues to bear fruit.
In the case of Intel, the Chinese market alone is said to account for 20% of its overall revenue. Reuters' sources say that Intel currently has a substantial backlog of unfulfilled orders for its fourth and fifth-generation Xeon server chips, and that the company is currently rationing deliveries.
In a statement to the outlet, Intel said that the rapid adoption of AI had led to strong demands for "traditional compute", and that the company expects "inventory at [its] lowest level in Q1, but we are addressing aggressively and expect supply improvement in Q2 through 2026."
While AI is driving such heavy demand for all sorts of computing components, chip manufacturers appear to be struggling to keep up. Intel's fourth and fifth generation Xeon chips are built on its own Intel 7 process node, while AMD's server chips are outsourced to TSMC.
Intel's struggles to ramp up its own chip manufacturing efforts in recent years are well documented, while TSMC looks to have been prioritising AI GPUs above, well, everything else. Even the current king of the AI revolution, Nvidia CEO Jensen Huang, has recently been pushing for TSMC to expand its capability for yet more AI-munching hardware, asking it to "work very hard this year because I need a lot of wafers".
There's only so much chip manufacturing capability to go around, and current demands are pushing the supply chain to its limits, it's no surprise that certain markets are already beginning to miss out.
As for the global consumer market, it's difficult not to think that this unprecedented demand might have a knock-on effect for our beloved gaming CPUs at some point. While server CPUs and regular CPUs are different markets in many ways, there's a significant amount of crossover in the supply chains.
Reports at the end of last year suggested AMD was looking at raising the price of its desktop chips, although some sources claimed otherwise. Given the price of *gestures around the room* everything to do with components seems destined to go up in these uncertain times, I certainly wouldn't rule out consumer CPU price rises in the near future. We'll just have to wait and see, I suppose.