A growing shortage of CPUs across the industry has sparked widespread concern, but the root cause is more complex than initially assumed. According to SemiAccurate’s analysis of Intel’s Q3 2025 earnings call, the issue stems not from production failures or yield problems at Intel, as some rumors suggest, but from broader systemic pressures tied to AI-driven demand and strategic decisions by major players. While Intel highlighted strong performance in several areas during its quarterly update, two key points stood out. First, Intel openly acknowledged it is no longer pursuing AI training silicon as a core focus. At around the 12-minute mark of the call, executives clarified that Intel’s AI hardware is now optimized for inference, physical AI, and agentic workloads—not training. This marks a significant retreat from earlier ambitions to compete directly with Nvidia in AI training infrastructure. This strategic pivot was reinforced by Intel’s announcement of a partnership with Nvidia involving Nvlink. While framed as a collaboration, SemiAccurate warns this move carries serious long-term risks. Historically, Nvlink integration has allowed Nvidia to exert tight control over its ecosystem. Once a partner integrates Nvlink, Nvidia gains the ability to undercut or replace them at any time—especially if the partner’s market becomes profitable enough for Nvidia to enter directly. This dynamic has played out repeatedly over the past two decades, including when Intel itself used similar tactics during the Sandy Bridge transition. By adopting Nvlink, Intel effectively cedes control over its future roadmap and customer relationships. As a result, any Xeon processor with Nvlink will have a single, dominant customer—Nvidia—while also being exposed to the risk of being replaced. This limits Intel’s ability to command strong margins and weakens its position in the data center market. The technical trade-offs are also significant, with the integration creating dependencies that could hinder future innovation and flexibility. More surprising was Intel’s admission at the 27-minute mark about ongoing supply constraints. The company confirmed that tight supply conditions are real and expected to continue into 2026. This news has been met with relief by many chip suppliers, as it suggests strong demand across the board. However, the origin of the shortage rumors—originally pointing to Intel’s 18A process, poor SKU mix, and low yields—has been debunked by multiple industry sources, including executives at OEMs and x86 suppliers. These claims were not supported by internal data or production reports. So if the problem isn’t Intel’s manufacturing, what is driving the shortage? The real answer lies in the surge in demand for high-performance CPUs driven by AI inference workloads. As companies deploy AI models at scale, the need for powerful, efficient processors has skyrocketed. This demand is not limited to one vendor—leading to a broad industry-wide strain on supply. Additionally, the shift toward agentic AI and real-time processing is increasing the need for faster, more capable CPUs, further tightening availability. In short, the CPU shortage isn’t a failure of Intel’s production or strategy. It’s a symptom of a market in overdrive, fueled by AI adoption across industries. While Intel’s strategic choices may limit its long-term competitiveness, the broader supply crunch reflects a fundamental shift in computing demand—one that benefits the entire semiconductor ecosystem in the short term.