US chipmakers Intel and AMD are locking in long term purchase agreements with Chinese server buyers as data center processor prices climb. Sources told Reuters that the contracts typically lock in order volumes but leave final pricing open. This shifts the balance of power in a market usually defined by immediate demand.
The wider AI infrastructure boom is the main reason for the shift. Building massive data centers requires far more than just Nvidia style graphics cards. It takes thousands of traditional CPUs to run networking, handle storage, and run basic system processes. This sudden hardware rush is squeezing suppliers. As a result, both Intel and AMD are pushing customers into contracts lasting 1 to 2 years to guarantee supply.
In China, the supply squeeze is hitting hard. Prices for some server processors have jumped more than 40% since the start of the year. Month on month increases are topping 10% for high demand chips. On top of that, wait times have ballooned. Intel recently told customers they might have to wait up to 6 months for certain Xeon products. Cloud companies are feeling the pinch as these rising costs threaten to slow down their AI rollouts.
This landscape frames the high stakes for Intel and AMD as they 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 top $120 billion by 2030. For Chinese tech giants, securing these chips remains vital, even as Western trade restrictions block them from buying premium graphics hardware.
