TL;DR: Intel's next-generation 18A process, its most advanced manufacturing technology, is ramping up more slowly than expected. Until it reaches high-volume production, the company's heavily utilized Intel 7 lines will continue to constrain output for both client and data center chips. In the meantime, Intel is prioritizing higher-margin server processors to offset supply limitations and preserve profitability.
Intel's rebound in chip demand during the third quarter has been tempered by ongoing supply constraints that continue to limit the company's ability to deliver both client and data center processors. Although CPU orders have strengthened across multiple product lines, Intel's production remains bottlenecked by limited manufacturing capacity and a persistent industry-wide shortage of packaging substrates.
During Intel's recent earnings call with analysts, Chief Financial Officer David Zinsner said the company continues to face "capacity constraints, especially on Intel 10 and Intel 7," noting that these issues restricted output for both client and data center products during the latest quarter.
Much of Intel's current production challenge stems from its reliance on the Intel 7 process node – formerly known as 10nm Enhanced SuperFin – introduced several product generations ago. Despite its age, the node remains central to Intel's CPU lineup, powering both 13th and 14th Generation Core processors, known as Raptor Lake, as well as the I/O dies for Xeon 6 "Granite Rapids" and 5th Generation Xeon Scalable "Emerald Rapids" chips.
Raptor Lake, originally launched in 2022, remains a strong seller in the client computing market thanks to its sustained performance and broad compatibility. However, Intel's decision not to expand manufacturing capacity on older process nodes has kept supply tight for these chips. As demand persists, prices for Raptor Lake processors have risen accordingly.
Zinsner acknowledged the challenge, saying Intel is "working closely with customers to maximize available output, including adjusting pricing and mix," as supply constraints persist. In practice, that likely means continued prioritization of premium products and higher-end SKUs at the expense of higher-volume, lower-cost CPUs.
Intel's constrained Intel 7 (7-nanometer-class) production lines are being heavily allocated to high-margin data center products, particularly the Xeon 6 series. These processors use I/O dies manufactured on Intel 7, tying their output directly to the same fabrication lines that support Raptor Lake.
Management has opted to divert wafer capacity toward data center CPUs, where each unit can sell for several thousand dollars – far outpacing even the most expensive client chips, which typically retail for under $600. Zinsner said Intel expects sequential gains in its Data Center and AI Group results during the current quarter, while Client Computing Group revenue will decline modestly due to this product mix shift.
Beyond wafer capacity, Intel's production outlook is further strained by limited availability of organic substrates, the thin materials that house and connect CPUs within their packages. The shortage is industry-wide, adding another layer of complexity to Intel's supply chain management. Because these materials are essential for assembling both desktop and server processors, the constraint affects all segments of Intel's CPU portfolio.
Intel expects supply challenges to continue through next year, driven by both node capacity limits and component shortages. The company warned that Q1 2026 may mark the peak of these constraints, with gradual improvement expected thereafter.
Zinsner noted that the company has been relying on accumulated inventory through late 2025 and is "cranking the output as much as we can with the factory."
Intel can't spin up 18A fast enough, so Intel 7 is now the new CPU bottleneck
