[News] Intel, AMD Reportedly Sign Long-Term Server CPU Deals with Chinese Customers Amid Tight Supply

Demand for server CPUs is rising alongside the rapid expansion of AI data centers. According to Reuters, citing sources, Intel and AMD are signing longer-term agreements for server CPUs with Chinese customers as prices continue to rise. The agreements typically lock in purchase volumes rather than prices, with one-year terms being the norm. Some, however, extend to two years or longer.

Reuters notes that the reported move mark a shift in the server CPU market, where processors have historically been easier to obtain than AI accelerators or memory chips. A tighter supply environment could increase costs and slow AI infrastructure deployment for Chinese cloud providers and internet companies. The development also mirrors the memory market, where AI-driven shortages have prompted customers to enter longer-term supply agreements.

The shift is already evident in prices. According to Reuters, server CPU prices in China continue to rise, with month-on-month increases exceeding 10% for some products. The report notes that prices for certain CPUs have climbed more than 40% since the beginning of the year. Earlier this February, Reuters reported that Intel and AMD had warned Chinese customers of server CPU supply shortages, with Intel saying delivery lead times could extend to as long as six months.

Analysts cited by Seoul Economic Daily said suppliers have gained greater bargaining power, enabling them to offer long-term agreements that secure purchase volumes in advance. The report adds that the rise of agentic AI has further boosted CPU demand, as CPUs are increasingly used for tasks such as database searches and document generation.

The Seoul Economic Daily report also notes that China is particularly vulnerable to rising CPU prices because of its large-scale AI data center buildout. The country relies heavily on CPU infrastructure to help offset U.S. restrictions on advanced AI GPU exports.

China’s AI Infrastructure Fuels Server CPU Demand

As Reuters points out, China is one of the world’s largest server markets, driven by the rapid expansion of data center racks, AI computing clusters, and national computing infrastructure. The buildout has intensified demand for Intel and AMD processors.

China is also a key market for Intel, accounting for more than 20% of its total revenue, Reuters reports. In China, Intel and AMD’s customers include leading server manufacturers and major cloud providers such as Alibaba and Tencent, the report adds.

Meanwhile, China’s major cloud service providers are investing heavily in CPU development. According to South China Morning Post, citing sources, ByteDance aims to complete the design of its next-generation in-house CPU by early next year at the latest, with mass production and broader deployment planned for the second half of 2027.

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(Photo credit: Intel)