Both Intel and AMD are experiencing significant supply shortages for their server CPUs in China, leading to extended delivery timelines and rising prices, according to multiple sources cited by Reuters. Customers have received warnings from both chipmakers indicating that orders could be delayed by up to six months, with AMD reporting lead times of eight to 10 weeks for certain products. The shortages are driving up prices, with reports indicating a 10% increase in the cost of Intel’s Xeon server processors, though final pricing may vary depending on individual contracts. The situation stems from intense demand fueled by the rapid expansion of AI infrastructure, particularly as hyperscalers and enterprises ramp up data center deployments to support generative AI and agentic AI systems. The AI boom has placed immense pressure on semiconductor manufacturing capacity. Data centers are projected to consume 70% of high-bandwidth memory (HBM) chips by 2026, prompting manufacturers to prioritize production for AI-focused clients—often at the expense of other markets. This shift has caused widespread shortages across industries reliant on memory chips, including consumer electronics, automotive, smartphones, and home appliances. In response, some companies have begun upgrading their server infrastructure earlier than planned to avoid being caught in the supply crunch. This unexpected surge in demand has further strained Intel and AMD’s ability to keep up with orders. Additionally, the rise of agentic AI systems—autonomous software agents that perform tasks on behalf of users—is increasing demand for traditional server CPUs. While GPUs remain essential for AI reasoning and inference, CPUs are critical for managing execution, coordination, and system operations. As a result, data center operators are not only investing heavily in GPUs but also scaling up their CPU procurement. Intel acknowledged the situation, stating that inventory levels were at their lowest in the first quarter but emphasized that it is taking aggressive steps to improve supply, with improvements expected through 2026. AMD reiterated its confidence in meeting global demand, citing strong supplier agreements and its partnership with TSMC to bolster production capacity. Despite these assurances, customers are left with little choice but to delay projects and wait for deliveries. The ongoing supply constraints underscore the growing challenges in scaling semiconductor production to meet the demands of the AI-driven digital transformation.