Intel chief executive Lip-Bu Tan has revealed that the company can currently meet only half of customer demand for CPUs, highlighting a supply crisis driven by explosive growth in AI inference workloads and industry-wide shortages.
Intel’s chief executive has made a rare public admission about supply pressure in the company’s chip business, saying at Splunk’s .conf26 conference in Denver that Intel is currently able to meet only about half of customer demand for CPUs. Lip-Bu Tan said executives were pressing him for more processors and that he has had to apologise because the company’s factories cannot keep pace with orders. Reuters’ summary of the remarks said the shortfall reflects a surge in demand linked to AI inference, the stage at which models and agents run live workloads after training.
The comments fit with Intel’s recent operating trend. Intel’s second-quarter revenue rose to $16.1 billion, up 25% year on year, after growth of 7% in the first quarter and 3% in the third quarter of 2025, according to the figures highlighted in the article. Its data centre and AI division grew 59% in the June quarter to $6.3 billion, while the client computing and physical AI unit rose 13%. Intel also guided for third-quarter revenue of $15.8 billion to $16.8 billion, a range that implies further growth from the prior year.
The supply issue is also showing up in margin recovery. Intel’s non-GAAP gross margin improved from 29.7% a year earlier to 41% in the first quarter of 2026 and 41.8% in the second quarter, with management guiding to 42% for the third quarter. That matters because chip manufacturing is highly fixed-cost: when factories run fuller, margins typically improve quickly.
Broader industry reports suggest Intel’s shortage is part of a wider AI infrastructure squeeze. TrendForce said Tan has also pointed to memory prices rising five to seven times, while power supply and cooling are emerging bottlenecks as AI deployment scales. Separately, a Yahoo Finance report said Tan is targeting a $100 billion market for custom AI silicon, underscoring Intel’s effort to turn the current demand shock into a longer-term business opportunity. TradingKey reported that Tan also highlighted Intel 18A entering mass production and 14A due to enter production in the first quarter, while warning about concentration risks in advanced packaging supply.
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