Intel has acknowledged ongoing limitations in processor availability, with the most noticeable impact seen in its server and data center operations. However, company leadership believes the situation will stabilize after the first quarter and gradually improve over the remainder of the year.
The update was shared during Intel’s earnings discussion for the fourth quarter of fiscal year 2025. During that period, the company reported revenue of $13.7 billion, reflecting a 4% decline compared to the same quarter a year earlier. The figure was unchanged from the previous quarter but slightly exceeded internal forecasts.
According to Chief Financial Officer David Zinsner, manufacturing output is expected to recover starting in the second quarter. He explained to analysts that Intel anticipates a steady increase in available processor supply from Q2 onward, continuing through the rest of 2026 as factory efficiency improves.
Despite overall revenue pressure, Intel’s Data Center and AI division delivered solid performance. Sales in this segment rose 9% year over year, reaching $4.7 billion. Zinsner noted that growth could have been significantly stronger if sufficient processors had been available, emphasizing that AI-driven workloads are consuming capacity at an unprecedented rate. This demand is stressing both legacy and next-generation infrastructure, highlighting the critical role CPUs continue to play in AI systems.
Intel is currently facing constraints across both its client and server processor lines, forcing the company to carefully allocate limited supply. To manage this, Intel has prioritized higher-margin products.
On the client side, production is being directed primarily toward mid-range and premium CPUs, with less emphasis on entry-level offerings. Any remaining capacity is being redirected to data center customers, where demand remains particularly strong.
Zinsner emphasized that Intel’s strategy is centered on serving its most strategic partners, including major OEMs and key enterprise data center customers, ensuring that available supply reaches those with the greatest business impact.
Chief Executive Officer Lip-Bu Tan reinforced this message, pointing out that the rapid expansion and diversification of AI workloads is intensifying pressure on computing infrastructure. As AI adoption accelerates, CPUs remain foundational to performance, scalability, and system integration.
In response to these market dynamics, Intel has streamlined its server processor roadmap. The company is now concentrating development efforts on its 16-channel Diamond Rapids platform while fast-tracking the launch of Coral Rapids. As part of this shift, Intel removed simultaneous multithreading from Diamond Rapids to eliminate resource contention issues that can arise when multiple threads share a single core—an approach similar to competitors that favor higher core counts over threading.
With Coral Rapids, Intel plans to reintroduce multithreading while also deepening its collaboration with Nvidia. The two companies are working together on a customized Xeon processor that integrates Nvidia’s NVLink technology, enabling tighter coupling between Intel CPUs and Nvidia GPUs for next-generation data center and AI workloads.