Intel and AMD lock Chinese customers into multi-year server CPU deals as prices surge over 40%

EXCLUSIVE: Intel, AMD sign long-term server CPU deals with Chinese clients as prices surge, sources say

BEIJING, July 23 (Reuters) - U.S. chipmaking giants Intel (INTC.O), opens new tab and Advanced Micro Devices (AMD.O), opens new tab are signing longer-term purchase commitments with Chinese server customers for data-centre processors as prices surge, two people familiar with the talks said. The move highlights a broader consequence of the AI boom: demand has spread beyond AI accelerators to memory, networking gear and server processors, giving suppliers greater leverage to seek long-term purchase deals. AI data centres require not only Nvidia-style graphics processors (GPUs) but also large numbers of central processing units (CPUs) to support servers, storage, networking and inference workloads. The agreements under discussion typically lock in purchase ⁠volumes but not prices, the people said. Most cover about a year of supply, although Intel and AMD have discussed commitments of two years or longer from some customers, one of the people said. The shift echoes trends in the memory-chip market, opens new tab, where the AI-driven shortage has pushed buyers toward longer-term supply commitments. The sources declined to be identified because they were not authorised to speak to the media. Intel and AMD did not respond to requests for comment. The talks mark a shift for server CPUs, which have been easier to obtain than AI accelerators or memory chips. Tighter CPU supply could raise costs and slow deployment for Chinese cloud providers and internet companies expanding AI services. Server CPU prices are still climbing in China, with ⁠month-on-month increases topping 10% for some products, one of the sources said. Prices of some CPU products have risen more than 40% in China since the start of the year, the source added. Reuters reported earlier this year that Intel and AMD had notified Chinese customers of lengthy waits for server CPUs, with Intel lead times reaching as long as six months for some products. The CPU ⁠shortage will be among the key topics likely to be addressed on Thursday when Intel reports its quarterly results. CEO Lip-Bu Tan told analysts in April that demand "continues to run ahead of supply," especially for Xeon server CPUs. He also cited a multi-year deal with ⁠Google as one of several long-term contracts Intel signed in the first quarter. AMD, due to report in early August, already raised its server CPU market forecast to more than $120 billion by 2030, citing strong demand related to agentic AI ⁠workloads. China is one of the world's largest server markets, fuelled by rapid construction of data centre racks, AI computing clusters and national computing infrastructure. The buildout has intensified competition for Intel and AMD processors, even as Chinese buyers face separate U.S. restrictions on access to the most advanced AI GPUs. Editing by Miyoung Kim and Kim Coghill Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Transactional * Capital Markets Eduardo Baptista Thomson Reuters Eduardo Baptista is a Senior Correspondent for Reuters based in Beijing, covering China's technology, space, and automotive industries. He has led enterprise and investigative reporting on China's military-linked companies, artificial intelligence and semiconductor supply chains, as well as macroeconomic and industrial policy. Baptista has reported from China for nearly a decade and holds a BA in History from the University of Cambridge.

Intel and AMD lock Chinese data centres into multi-year CPU deals as prices surge

Server processors, long the unglamorous half of the AI build-out, are now scarce enough that buyers in China are signing away two years of volume at a time. Server processors were meant to be the boring corner of the AI boom. The exotic money went to graphics accelerators, while the central processing units sitting beside them were treated as a solved problem, cheap, plentiful, and interchangeable. That assumption is coming apart in China. Intel and AMD have signed longer-term supply commitments with Chinese server customers as data centre CPU prices climb, according to Reuters, which cited two people familiar with the talks. The contracts lock in purchase volumes rather than fixed prices, a structure that leaves buyers exposed if the shortage drags on. China is a particularly tight corner of that market, partly because it has spent two years living inside Washington's export controls. With access to the most powerful Western accelerators restricted, Chinese operators have leaned harder on the components they can still buy freely, and general-purpose server CPUs from Intel and AMD remain among them. The scarcity has already produced some remarkable local pricing. Nvidia's B300 servers have changed hands in China for close to $1 million, roughly double the going US rate. The same curbs have pushed the country's chip designers toward custom ASICs, though those do not remove the need for a conventional processor to run the system. Chinese customers would typically commit to about a year of supply. This time, both chipmakers have discussed commitments of two years or longer with some buyers, the people said. Neither Intel nor AMD responded to requests for comment, and the customers were not named. The particulars that would matter most are the ones that stayed private. Reuters' sources did not disclose the volumes involved, the pricing formulas the contracts leave open, or how many buyers have signed. What is clear is the direction of travel, and that it applies to Intel's Xeon line and AMD's EPYC parts alike. The pricing moves are steep. Some server CPU products in China have posted month-on-month increases of more than 10%, and certain lines are up more than 40% since the start of the year, the sources told Reuters. It is the kind of curve normally associated with memory chips, not processors. The cause is the same one reshaping the rest of the hardware market. The build-out of AI data centres has pushed demand well beyond Nvidia's accelerators and into the surrounding components, memory, networking gear, and the server CPUs that orchestrate a rack. Intel's lead times for some Xeon parts have stretched to around six months. The surge is not confined to China, and it is not confined to CPUs. A broader memory crunch has driven server component lead times out to 40 weeks and beyond as DRAM and high-bandwidth memory are diverted to AI systems, with contract manufacturers warning that the squeeze has now reached fully built servers. Processors are simply the latest link in the same supply chain to seize up, and the volume deals in China read as an attempt to get ahead of it. For Intel and AMD, the demand is a welcome problem. "Demand continues to run ahead of supply," Intel chief executive Lip-Bu Tan told analysts in April, and the comment has aged into an understatement. AMD, for its part, expects the server CPU market to exceed $120 billion by 2030. The volume-not-price structure of the new deals tells its own story. Buyers are willing to guarantee two years of orders without knowing what they will pay, a bet that supply, rather than cost, is the thing worth securing. Chipmakers, meanwhile, keep the freedom to reprice if the crunch holds. It is a familiar posture for anyone who has watched Intel's capacity expansion or the memory shortage of the past year. What is new is where it has spread. When the least glamorous chip in the rack starts commanding two-year contracts, the shortage has stopped being about AI accelerators and started being about everything they need to run.

Intel and AMD are locking Chinese customers into long-term CPU deals as server chip prices climb more than 40%

The AI boom has pushed chip shortages well beyond GPUs and memory. According to a Reuters report citing two people familiar with the talks, Intel and AMD are now signing longer-term purchase commitments with Chinese server customers for data centre CPUs, as prices for some products have climbed more than 40% since the start of the year, with month-on-month increases still exceeding 10% for certain parts. The agreements lock in purchase volumes rather than prices, leaving Chinese cloud providers and internet companies fully exposed to a market that has already added 40% to some CPU prices in under seven months. Most deals cover roughly a year of supply, though Intel and AMD have discussed commitments running to two years or longer with some customers. This marks a meaningful shift for server CPUs, which have historically been far easier to obtain than AI accelerators or memory chips. Intel flagged the change as far back as February, when it warned Chinese customers that lead times for some Xeon server parts could stretch to six months. AMD was quoting eight to ten weeks around the same time. By late March, server manufacturers were reporting average CPU lead times had ballooned from the usual one to two weeks to eight to twelve weeks and beyond. The demand surge is being driven by agentic AI workloads, which place considerably more load on CPUs than previous AI applications. Intel CEO Lip-Bu Tan acknowledged the shift on the company's April earnings call, telling analysts that demand "continues to run ahead of supply" for Xeon server parts and that the CPU is "reinserting itself as the indispensable foundation of the AI era." AMD has raised its server CPU market forecast to more than $120 billion by 2030 based on the same agentic AI trend. China accounts for more than 20% of Intel's total revenue, and major cloud providers including Alibaba and Tencent are among its key customers in the region. The long-term deal model is not new territory for Intel. The company confirmed a multi-year supply agreement with Google during its first quarter earnings call, so the same approach now spans US hyperscalers and Chinese channel buyers.

Intel and AMD just got leverage they haven't had in years

Intel and Advanced Micro Devices are signing longer-term purchase agreements with Chinese server customers as data center processor prices surge, according to a Reuters report citing people familiar with the talks. Server CPUs have spent years as the dependable, easy-to-source layer of an AI data center, unlike GPUs or memory chips. That status just flipped, and Chinese buyers are now locking in supply without any guarantee on price. The timing raises the stakes. Intel reports second quarter earnings Thursday, July 23 after the closing bell, and this report lands hours ahead of that call. Investors will be listening for whether management addresses the pricing dynamic directly or leaves it to analysts to connect the dots. The deals trade price certainty for guaranteed supply The agreements typically lock in purchase volumes but not prices. Most cover roughly a year of supply, though Intel and AMD have discussed commitments running two years or longer with some customers. That structure favors the seller, not the buyer. A customer accepting volume terms without price protection is betting that availability matters more than cost. CPU buyers rarely had to make that trade before this year, which is what makes the shift notable rather than routine. Cheng Chia Huang / Getty Images The shortage built quietly, then showed up in the price Server CPU prices in China have climbed more than 40% since the start of the year, with some products rising over 10% month on month. Intel's Xeon server processors have also faced lead times of up to six months for some orders. Those numbers point to a supply gap that formed well before this week's contracts became public. China is one of the world's largest server markets, driven by rapid construction of data center racks, AI computing clusters and national computing infrastructure, which has intensified competition for both companies' chips. This cycle looks different from the 2021 chip shortage, when the bottleneck sat mostly in auto-grade semiconductors and foundry capacity, not general-purpose CPUs. Server processors were rarely the constrained part of an AI build. Agentic AI workloads changed that math, since they lean on CPUs for orchestration, storage and inference alongside the GPU work that gets most of the attention. AMD has raised its long-term forecast for the global server CPU market to more than $120 billion by 2030, citing demand tied to agentic AI workloads. Intel CEO Lip-Bu Tan told analysts in April that demand was running ahead of supply for Xeon chips specifically, pointing to a multiyear agreement with Google as one of several long-term contracts signed in the first quarter. Wall Street flagged this before the story broke KeyBanc analyst John Vinh raised his price target on AMD to $725 from $530 and lifted his Intel target to $155 from $110 earlier this month, both moves tied to tightening server CPU capacity. That was before this week's China reporting surfaced. Susquehanna analyst Christopher Rolland made a similar call, raising his Intel price target to $115 from $80 while citing stronger-than-anticipated server CPU demand. Two analysts reaching the same conclusion from different angles is a stronger signal than either call alone. Back in January, Vinh had already said Intel was largely sold out of server CPUs for 2026 and was considering an average selling price increase of 10% to 15%, according to CNBC. The China contracts reported this week look less like a new development and more like confirmation of something analysts had already priced in. Intel (INTC) shares closed on July 22 at $102.62, near their 52-week high of $142.35 set on June 30. The stock barely moved on the July 23 report. Investors are saving their reaction for Intel's second quarter results, due after Thursday's closing bell. The AI shortage is moving down the stack This is the same pattern that hit memory chips earlier in the AI buildout, when DRAM and NAND prices spiked as hyperscaler orders outran capacity. That dynamic has now reached the CPU, the most basic component in any server rack, not just the accelerators getting most of the attention. Server processors also sit outside the export restrictions Washington has placed on advanced AI GPUs bound for China. Chinese buyers face a price problem here, not an access problem, which is a distinction most coverage of the chip war overlooks. Two catalysts will test how durable this pricing power really is. Intel's earnings call Thursday evening could confirm or complicate the shortage narrative, and AMD reports in early August with its own server CPU numbers due for scrutiny. For investors, the bigger takeaway is that AI-driven scarcity is no longer a GPU story alone. It is working its way through every layer of the stack, and the next pricing surprise may not come from Nvidia's side of the market at all. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 23, 2026 at 3:25 PM.