Intel Prioritizes Data Centers Amid Global Supply Shortage

Key points:

• Intel reported better than expected Q3 figures, with a net income of $4.1 billion and revenue of $13.7 billion, exceeding analyst expectations.
• The company is experiencing a shortage of supply, particularly with its Intel 10 and Intel 7 semiconductor manufacturing processes, which is limiting its ability to meet demand for client and data center products.
• Intel is working to maximize its available output by adjusting pricing and mix to shift demand towards products where it has supply, and expects the fourth quarter to be roughly flat versus the third quarter in terms of revenue.

According to sources, Intel has reported a significant turnaround in its sales, with a net income of $4.1 billion, or EPS of $0.23, on revenues of $13.7 billion for the quarter ending September 30. This is a major improvement from the same quarter in 2024, when the company reported a net loss of $16.6 billion or EPS of -$0.46. Intel CEO Lip-Bu Tan attributed the success to improved execution and steady progress against the company’s strategic priorities, including a renewed focus on its core business and a growing demand for Artificial Intelligence (AI).

The Client Computing Group (CCG), Intel’s biggest business unit, earned revenues of $8.5 billion in the quarter, a gain of 5% year-over-year. The Data Center and AI (DCAI) revenue was $4.1 billion, down 1% YoY. However, the company is facing a shortage of supply, particularly with its Intel 10 and Intel 7 semiconductor manufacturing processes. This has limited its ability to meet demand for client and data center products, with CFO David Zinsner stating that "capacity constraints, especially on Intel 10 and Intel 7, limited our ability to fully meet demand in Q3 for both data center and client products."

As a result, Intel is working to maximize its available output by adjusting pricing and mix to shift demand towards products where it has supply. The company is also prioritizing wafer capacity for server shipments over entry-level client parts, which is expected to impact the fourth quarter revenue. Zinsner projects that the fourth quarter will be roughly flat versus the third quarter in terms of revenue, with Intel products up modestly sequentially but below customer demand.

The shortage of supply is a significant challenge for Intel, particularly as it relates to Microsoft’s Azure and other cloud computing services that rely on Intel’s server products. As the demand for AI and cloud computing continues to grow, Intel’s ability to meet this demand will be crucial to its success. The company’s foundry business, which reported revenues of $4.2 billion, down 2% YoY, will also play a key role in meeting this demand. With the current tight capacity environment expected to persist into 2026, Intel will need to continue to work closely with its customers to maximize its available output and meet the growing demand for its products.

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