Intel expects CPU supply will improve after the first quarter
Intel said that it is facing a CPU shortage, particularly affecting the data center/server business, but that it expects the problem to peak this quarter and ease throughout the year.
The comments came on the earnings call to discuss fourth quarter 2025 earnings, which stated that revenue declined 4% year-over-year to $13.7 billion, the same as the previous quarter and slightly above company projections.
[ Related: More Intel news and insights ]
In a statement accompanying Intel’s earnings, CFO David Zinsner said that the company’s CPU supply will improve after the first quarter. On the earnings call with Wall Street analysts, he elaborated “we expect our factory network to improve available supply beginning in Q2 and for each of the remaining quarters in 2026.”
Fourth quarter Data Center and AI segment saw the most revenue growth, increasing 9% year over year to $4.7 billion and Zinsner said “revenue would have been meaningfully higher if we had more supply,” stating that AI workloads are placing “significant capacity constraints on traditional and new hardware infrastructure, reinforcing the growing and essential role CPUs play in the AI era.”
Zinsner said that Intel is constrained in supply both for client and server and it had to do some balancing between the two.
“What we’re doing within client we’re focusing on the mid- and high end and not as focused on the low end. And then to the extent we have excess, we’re pushing all of that into the data center space to meet that customer demand,” he said.
“We have important customers in the data center side. We have important OEM customers on both data center and client and that needs to be our priority to get the limited supply we have to those customers,” he added.
CEO Lip-Bu Tan added that the continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure, reinforcing the growing and essential role CPUs play in the AI era.
Because of this, Intel decided to simplify its server road map, focusing resources on the 16-channel Diamond Rapids product and accelerate the introduction of Coral Rapids. Intel had removed multithreading from diamond Rapids, presumably to get rid of the performance bottlenecks. With each core running two threads, they often competed for resources. That’s why, for example, Ampere does not use threading but instead applies many more cores per CPU.
With Coral Rapids, Intel is not only reintroducing multi-threading back into our data center road map but working closely with Nvidia to build a custom Xeon fully integrated with their NVLink technology to Build the tighter connection between Intel Xeon processors and Nvidia GPUs.
Another aspect impacting supply has been yields or the new 18A process node. Tan said he was disappointed that the company could not fully meet the demand of the markets, and that while yields are in line with internal plans, “they’re still below where I want them to be,” Tan said.
Tan said yields for 18A are improving month-over-month and Intel is targeting a 7% to 8% improvement each month.
