Exclusive-Intel, AMD notifies customers in China about long wait for CPUs

BEIJING, Feb 6 (Reuters) – Intel ( INTC ) and AMD ( AMD ) have notified Chinese customers of supply shortages for server central processing units (CPUs), with Intel warning of delivery times of up to six months, people with knowledge of the delay said.

Supply constraints have raised prices for Intel’s server products in China by more than 10% generally, although prices vary by customer contract, according to one of the people.

Booming investment in artificial intelligence infrastructure has created a frenzy not only for AI-specific chips, but also for other parts of the supply chain – most notably in memory chips, whose prices continue to rise.

These latest announcements to Chinese customers, which the sources said were made in recent weeks, indicate that the CPU shortage has also intensified. This could add to the challenges for AI companies as well as many other manufacturers.

BACKLOGS OF UNSATISFIED ORDERS

In China, which accounts for more than 20% of Intel’s global revenue, its fourth- and fifth-generation Xeon CPUs are particularly short, ⁠with Intel rationing deliveries, two of the people said.

Intel has a substantial backlog of unfulfilled orders for these models, with delivery times extending up to six months, they added.

AMD also informed customers about supply constraints, one of the people and a third source said. Delivery times for some AMD products have been pushed to 8 to 10 weeks, a third source said.

The extent of the supply contraction in China is being reported by Reuters for the first time.

Intel, which pointed to CPU supply constraints in its January earnings call, said in a statement to Reuters that the rapid adoption of AI has led to strong demand for “traditional computing”.

The company expects “inventory at the lowest level in Q1, but we are aggressively addressing and expect an improvement in supply in Q2 through 2026,” the statement said.

AMD reiterated remarks in its earnings call that it has increased its supply capabilities to keep up with strong demand.

“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,” he said in a statement to Reuters.

DOMINANT MARKET SHARE FOR CPUS

The two companies together dominate the global server CPU market. Intel saw its market share drop from more than 90% in 2019 to about ⁠60% in 2025, while AMD’s share rose from about 5% in 2019 to more than 20% last year, according to a UBS report in January.

In China, customers include major server manufacturers and cloud computing providers such as Alibaba and Tencent.

The lack of CPU comes from multiple factors.

Intel has struggled to ramp up production amid persistent manufacturing yield challenges. AMD outsources production to Taiwan’s TSMC, the world’s top contract foundry, which has prioritized AI chip manufacturing and left limited capacity for CPUs.

In addition, the lack of memory chips – also a key component of the server – played a role. When memory prices began to rise late last year in China, customers accelerated purchases of CPUs to lock in lower prices for memory, said a third source, a distributor that sells both server CPUs and memory products.

The ever-increasing demand for agentive AI systems – which perform complex, multi-step operations beyond simple chatbot functionality – has continued to strain supply. These advanced applications require significantly more CPU processing power than traditional workloads.

(Reporting by Liam Mo and Brenda Goh; Editing by Edwina Gibbs)