Demand for artificial intelligence is causing a seismic shift in the server processor market. Intel and AMD have begun negotiating long-term supply agreements with data centers in China , according to sources close to the talks. This move comes in response to price increases that, for some CPU models, have exceeded 40% since January, and delivery times that have stretched to as much as six months.
The rise of so-called 'agent AI' is behind this shift in trend. Traditional processors have regained a leading role as the orchestration layer in artificial intelligence architectures , a role that until now seemed reserved for GPUs. Both Intel and AMD have seen demand for their server CPUs skyrocket, leading Chinese buyers to seek contracts that guarantee supply volume for the next one or two years.
Long-term contracts in China
According to Reuters, the agreements focus on the volume of processors, not the final price . Buyers commit to specific quantities but leave the cost unfixed, assuming it could fluctuate over the agreed period. Most contracts cover approximately twelve months, although some discussions include commitments of two years or more.
This practice is reminiscent of the RAM crisis , where AI demand triggered a rush to secure inventory. Server CPUs haven't traditionally faced this level of pressure , but the expansion of artificial intelligence infrastructure is affecting all layers of hardware. Intel and AMD had already warned their Chinese customers about longer delivery windows, and in the case of some Xeon processors, wait times have stretched to six months.
Rising prices and delivery times
In China, server CPU prices continue to climb. Some products are seeing monthly increases of over 10% , and certain product lines have risen by more than 40% compared to levels at the beginning of the year. These increases are driving up costs for cloud providers and internet companies that need to expand their computing capacity.
Intel CEO Lip-Bu Tan stated in April that demand continued to outpace supply, particularly for Xeon chips. Tan cited a multi-year agreement with Google as an example of the extended contracts the company is securing . Meanwhile, AMD has raised its forecast for the server CPU market, noting that agentive AI will be a key driver of growth.
Growth prospects for Intel and AMD
KeyBanc analysts also see a favorable outlook for both manufacturers. They expect growth in server CPU units for both Intel and AMD , driven by agentive AI workloads that increase demand for traditional processors.
While NVIDIA dominates the AI ​​accelerator market, Intel and AMD CPUs remain critical for handling the computing workloads that power artificial intelligence systems . Inference, the stage where a trained model generates responses, relies heavily on these processors. Therefore, a CPU supply constraint can disrupt operations even when GPUs are available.
The combination of long-term contracts, rising prices, and growth prospects paints a picture in which Intel and AMD face the challenge of meeting relentless demand . Chinese data centers, among the largest in the world, are reconfiguring their purchasing strategies to avoid shortages. Meanwhile, the global server processor market is gearing up for an expansion cycle that analysts predict will be significantly prolonged.