The expanding market for artificial intelligence (AI) infrastructure is exerting escalating pressure on the availability of traditional computing components, particularly server central processing units (CPUs), in the Chinese market. Intel Corporation (NASDAQ: INTC) and Advanced Micro Devices, Inc. (NASDAQ: AMD), two of the key global suppliers in this space, have reported tightening supplies and extended shipping schedules for their server CPUs, as the demand surge outpaces current production capacity.
Intel has formally notified its customers in China that delivery lead times for server CPUs could extend to approximately six months. This development reflects a substantial elongation of typical fulfillment periods, underscoring acute supply constraints. The shortages have also translated into elevated pricing pressures in the local market, with Intel's server product prices reportedly rising by over 10% in many instances, according to market sources familiar with the matter.
Advanced Micro Devices, ATI's key competitor, has similarly signaled supply limitations affecting its Chinese clientele. AMD's reported delivery lead times in the region range from eight to ten weeks, highlighting a notable delay compared to normal expectations. Both companies are responding to the increased demand by rationing shipments and actively managing their order books, particularly for their most sought-after products.
The constraint is especially pronounced for Intel's fourth- and fifth-generation Xeon server processors, critical components widely used in enterprise and cloud computing environments. China accounts for more than 20% of Intel's revenue, emphasizing the significance of the region for the company's business operations. The scarcity of these processors contributes directly to backlogs and deferred shipments, prompting strategic supply allocation measures.
Underlying these supply issues is the broader surge in AI-driven infrastructure investment worldwide, which has not only increased demand for specialized AI chips but also intensified the need for traditional computing elements such as CPUs and memory. This increased demand is reflected in rising prices across multiple component categories, adding cost pressures across the supply chain.
Intel projects that supply circumstances will start to ameliorate beginning in the second quarter of 2026, aligning with capacity expansion plans and anticipated manufacturing improvements. AMD has recently strengthened its production capabilities through partnerships with Taiwan Semiconductor Manufacturing Co. (NYSE: TSM), aiming to alleviate delivery constraints in the medium term.
Notably, KeyBanc Capital Markets analyst John Vinh recently upgraded his outlook for both Intel and AMD, highlighting the robust demand for AI-enabled servers as a driving factor. Vinh pointed out data from December indicating a slight decrease in the deployment of traditional server instances, attributed to the retirement of legacy systems. Despite this, overall compute demand continues to rise year-over-year, bolstered by AI workload growth.
Short-term momentum in cloud infrastructure appears to favor Intel, with a notable increase in deployments of the Granite Rapids server processors in Amazon Web Services’ (NASDAQ: AMZN) environment. Other new Intel server CPUs also show steady adoption gains. While this trend gives Intel some positive momentum, AMD maintains a stable position with continued product rollouts, including the Turin and Genoa processors, being integrated across major cloud providers.
Equity markets responded favorably to these dynamics, with AMD shares appreciating around 74% over the past twelve months and Intel's shares increasing approximately 148% during the same period, reflecting investor optimism around the companies' capacity to capitalize on AI-related server demand growth.
Market activity during premarket trading on Friday saw AMD shares rise approximately 3.74% to $199.70, while Intel shares increased by 2.32% to $49.36, based on Benzinga Pro data.