As demand for artificial intelligence (AI) computing continues to surge, the central processing unit (CPU) market is experiencing a new wave of price increases. ODM companies point out that since March of this year, consumer CPUs and server CPUs have seen price increases of 5%–10% and 10%–20% respectively, reflecting not only tight production capacity but also the strong demand for core computing components driven by the expansion of AI infrastructure. Supply chain sources reveal that major international manufacturers are planning another round of price increases in the third quarter.

The driving force behind CPU price increases

Industry analysts believe this round of CPU price increases is driven by two main factors: rapidly increasing demand for AI servers and highly concentrated advanced process technology capacity, making it difficult for the supply side to respond promptly to demand. Intel reportedly raised PC CPU prices in March and further adjusted server CPU prices on April 1st, leading to a rebound in gross margins in the second quarter. The market expects another 8% to 10% price increase in the second half of the year, indicating that the supply-demand gap has not yet eased.

AMD, another CPU giant, is also rumored to be planning two price increases for its server CPU product line this year, one in the second quarter and one in the third quarter, with a cumulative increase of 16% to 17%. 

As 2nm and 3nm processes enter mass production and expansion phases, AI chips, GPUs, TPUs, and CPUs are all vying for capacity, further increasing wafer foundry pricing and delivery time pressures. Supply chain sources state that "CPUs are still in a state of severe supply shortage," and the price increases show no signs of ending.

Wafer foundry operators revealed clues from TSMC's increased capacity allocation. In the past, TSMC rarely expanded its production capacity after its process technology matured. However, the company continues to increase its 3-nanometer capacity, which is likely due to the simultaneous surge in demand for CPUs and AI ASICs. Currently, mainstream generation CPUs from Intel and AMD, as well as NVIDIA's upcoming Vera CPU, all use the 3-nanometer process.

Intel's response

Intel recently announced the acquisition of a 49% stake in its Irish Fab 34 wafer fab for $14.2 billion, regaining control of its production capacity. This fab is a key site for Intel's Intel 4 and Intel 3 process technologies and is currently one of the highest-volume advanced process wafer fabs. Market analysts interpret this as Intel proactively building up production capacity in anticipation of the explosive growth in CPU demand during the AI inference era.

Analysts predict that the CPU market will remain highly tight between 2026 and 2027, with the key factor not being demand, but production capacity. As long as AI infrastructure continues to expand and bottlenecks in advanced processes and packaging remain unresolved, the upward trend in CPU prices will continue, benefiting the entire supply chain, including wafer foundries, packaging and testing, and equipment and materials.

Source: Commercial Times

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