Intel and AMD are facing severe server CPU shortages in the Chinese market, with delivery delays stretching up to six months for Intel and 8-10 weeks for AMD. This supply crunch has already driven up prices for Intel's server products in China by more than 10%, creating significant challenges for data-center operators and cloud providers in one of the world's largest tech markets.
The shortages primarily affect Intel's fourth- and fifth-generation Xeon server processors, which are experiencing extended lead times and a growing backlog of unfulfilled orders. China represents a critical market for Intel, accounting for over 20% of the company's total revenue. The company has acknowledged that inventory levels are expected to reach their lowest point in the first quarter of 2026 before gradually improving in the second quarter.
The root cause of these shortages is the global artificial intelligence infrastructure boom, which is reshaping semiconductor manufacturing priorities. Foundries and chipmakers, including Intel's manufacturing partner TSMC, are prioritizing high-margin AI accelerators and related products, often at the expense of traditional server CPUs. This shift has created a ripple effect across the entire semiconductor ecosystem.
AMD is facing similar constraints, with the company informing Chinese clients of extended lead times. The situation is compounded by TSMC's focus on AI chip production, which limits capacity for CPU manufacturing. Both companies control the majority of the global server CPU market, with Intel's share dropping from over 90% in 2019 to about 60% in 2025, while AMD's share grew from around 5% to more than 20% during the same period.
The supply-demand imbalance presents a dual challenge for Chinese customers, including major server makers and cloud providers like Alibaba and Tencent: rising capital expenditures due to higher hardware prices and delayed capacity expansion due to extended wait times. Some analysts suggest that prolonged delays could accelerate China's shift toward domestic processor alternatives.
