Intel and AMD secure long-term server chip supply deals in China amid rising AI demand

US chipmakers Intel and AMD are securing long-term purchase agreements with Chinese server buyers as data center processor prices climb. According to Reuters sources, these contracts typically lock in order volumes while leaving final pricing open—a shift that disrupts the traditional balance of power in a market usually defined by immediate demand.

The broader AI infrastructure boom is driving this change. Building massive data centers requires far more than Nvidia-style graphics cards; it demands thousands of traditional CPUs to handle networking, storage, and basic system processes. This sudden hardware surge is straining suppliers, prompting both Intel and AMD to push customers into one- to two-year contracts to guarantee supply.

The squeeze is hitting China's market particularly hard. Prices for some server processors have jumped more than 40% since the start of the year, with month-on-month increases topping 10% for high-demand chips. Lead times have stretched dramatically—Intel recently told customers they might wait up to six months for certain Xeon products. For cloud companies, these rising costs threaten to derail AI deployment plans.

The situation carries high stakes as Intel and AMD report quarterly earnings. Intel CEO Lip Bu Tan has previously acknowledged that chip demand is running far ahead of supply, citing similar multi-year deals with partners like Google. AMD has also revised its server processor market forecast upward, predicting the sector will reach $120 billion by 2030. For Chinese tech giants, securing these chips remains vital, even as Western trade restrictions block them from purchasing premium graphics hardware.