Intel said it is reallocating manufacturing capacity from its retail chip production to meet growing demand for its Xeon processors, which are used in artificial intelligence servers.
Intel said it is reallocating manufacturing capacity from its retail chip production to meet growing demand for its Xeon processors, which are used in artificial intelligence servers.
In a fourth-quarter report, Intel CFO David Zinsner acknowledged that the company found itself in a difficult position after misjudging demand for its data center products, leading to a capacity shortage during the quarter.
He said that six months ago, «all hyperscale customers» were signaling their intention to order fewer chips with more cores. They soon changed their minds, and demand for Intel Xeon products increased significantly in the third and fourth quarters. The Intel Xeon 6 platform is widely used as host processors in GPU systems such as the Nvidia DGX B200 and B300, as well as in many AMD Instinct-based GPU boxes.
Zinsner said Intel is now «moving into data centers as much as possible.» He promised that the company would not «completely» abandon its client business to move into AI revenue in data centers.
«In the client segment, we are focusing on the mid-to-high price segment, not the low end. As we have excess [capacity], we are moving all of that into the data center space,» the CFO said.
Thus, Intel will favor more expensive Core series processors to make room for Xeon, and there will be fewer cheaper PCs with budget Intel processors on the market.
Previously, major memory makers such as Micron, SK Hynix and Samsung have also been betting on business-grade chips, driven by the AI boom. In the past few months, all three companies have begun refocusing their advanced manufacturing capabilities on high-margin DRAM and high-bandwidth memory used in servers and AI accelerators. At the same time, consumer RAM prices have tripled.
«Increasing component prices are a dynamic that we continue to monitor closely, especially in the customer market, and which could limit our revenue opportunities this year,» Zinsner noted.
The global RAM market is currently experiencing an unprecedented crisis, caused by the explosive demand for artificial intelligence chips. DRAM prices have increased by 171,8% in a year and have even exceeded the growth rate of the value of gold. A 64GB DDR5 memory kit already costs over $500 — more expensive than a PlayStation 5 game console.
dev.ua looked into what the DRAM shortage threatens for ordinary users, who is to blame, and how long the crisis will last.
