Intel is giving up some of the factory capacity it had planned for PC processors so it can build more server chips. The company says demand for data centre CPUs from AI customers is outrunning supply, while the PC market keeps shrinking.
Chief executive Lip-Bu Tan called it “one of the most significant supply shortages in history” on the earnings call, and Intel expects the squeeze on supply to stay severe through the first half of 2027.
Oregon lines switch from 18A to Intel 3
The most concrete move is in Oregon. Intel plans to convert some capacity there from its 18A process, which was meant for Panther Lake laptop chips, to Intel 3, the older process behind its Xeon 6 server processors. That extra Intel 3 output is due in the second half of 2027. According to Tom’s Hardware’s account of the call, finance chief David Zinsner said weaker PC demand freed that room.
Intel is also expanding Fab 24 in Ireland for more Xeons, though that capacity is not expected before the end of 2027, and it has started installing tools in Fab 62 in Arizona ahead of schedule. Packaging is a second bottleneck: Intel says it is short of advanced substrates and expects about 40% more substrate capacity in the second half of 2027.
The numbers behind it
In its third-quarter results released on 29 October, Intel reported revenue of $16.5 billion, up 21% from a year earlier. Its data centre and AI unit brought in $7.3 billion, up nearly 80% year on year. For the fourth quarter Intel forecast $15.0 billion to $16.0 billion in revenue.
Intel expects capital spending of roughly $20 billion in 2026 and a significant increase in 2027. Zinsner said the PC slowdown should continue until at least mid-2027, although Intel still hopes to win some market share with its upcoming Nova Lake desktop and laptop chips.
Intel did not say how much of its Arizona capacity will go to client chips and how much to servers, so the split for Nova Lake remains an open question.
For buyers, the practical effect is that consumer chips may stay tight and pricey until the new capacity arrives late next year.
