Intel has announced that it is reallocating its manufacturing capacity to meet the growing demand for Xeon processors used in artificial intelligence servers. The company plans to reduce the production of chips for retail consumers.
Intel Chief Financial Officer David Zinsner stated that six months ago, major customers signaled a reduction in orders. However, the situation has changed dramatically, and demand for Xeon processors has surged. These CPUs are used in AI servers, including Nvidia DGX and AMD Instinct systems. To meet demand, the company is shifting manufacturing resources toward the mid-range and high-end segments.
A similar situation is being observed in the memory market, where manufacturers are focusing on producing DRAM for servers and AI accelerators. As a result, RAM prices have increased more than threefold.
Rising component prices have become another factor influencing Intel’s strategy. The company acknowledges that there is little sense in fully loading factories with client processors if consumers are discouraged by high PC prices caused by expensive memory.
Zinsner expects capacity constraints to begin easing in the second quarter of the current financial year.
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