Intel Reallocates PC Production Capacity to Server CPUs Amid Tight Wafer Supply

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Intel shifts PC wafer production to Xeon server CPUs due to hyperscaler demand, impacting client CPU availability but prioritizing data center shipments.

Quick Report

Intel has announced a strategic shift in its production priorities, reallocating wafer capacity from its PC Client Computing Group (CCG) to the Data Center and AI (DCAI) group to address a surge in demand for Xeon server CPUs from hyperscaler customers. This move comes amid a tight wafer supply and follows weaker-than-expected Q1 2026 guidance.

Intel CFO David Zinsner explained that both the data center and client segments will see reduced supply, but the company is prioritizing server CPU production to meet high demand. The latest Xeon 6 “Granite Rapids” and “Sierra Forest” processors, manufactured on Intel 7 and Intel 3 nodes, are the main focus of this reallocation. Notably, the newest “Panther Lake” client CPUs, built on the 18A node, are not affected by this shift, while some other client CPUs like “Arrow Lake” (produced at TSMC) also remain unaffected. However, older client CPU lineups may experience lower availability as inventory levels decrease.

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Source(s)

  • TPU