In 2026, lower-end PCs may be more difficult to come by, and for those that are available, price tags may rise.
This is fallout from Intel’s plans to pivot its manufacturing capacity from chips for PCs to Xeon processors to support intensive AI workloads. The company has admitted that it had miscalculated demand for its data center products, and will now go all-in on AI-ready hardware.
This strategic turn indicates how voracious companies are for infrastructure that can power intensive AI workloads, to the point that even tech giants like Intel aren’t prepared for the demand.
“Intel’s move to prioritize data center capacity is in response to a supply-demand mismatch, or rather, faulty forecasting from their hyperscaler customers who rapidly shifted to the higher core-count solution late last year,” noted Scott Bickley, advisory fellow at Info-Tech Research Group.
Accelerating Xeon
In an earnings call this week, Intel CFO David Zinsner acknowledged capacity constraints in Q3 and Q4 as demand for its Xeon products soared. Intel Xeon 6 server processors (codenamed Granite Rapids and Sierra Forest) were designed for data centers, cloud, AI, and high performance computing (HPC), and are widely used by Nvidia.
At the same time, industry-wide demand for key components like dynamic random-access memory (DRAM), NAND, and substrates is ballooning due to intense demand for AI-ready infrastructure, said Zisner.
Just six months ago, he noted, unit sales were not expected to increase. “Every hyperscaler customer we talked to was signaling that,” he said. However, Intel experienced a rapid increase in orders for Xeon processors over the third and fourth quarters, and, after talking with hyperscalers, Zinsner said he got the impression that this will be “a story we’d feel for several years.”
“To the extent we have excess, we’re pushing all of that into the data center space to meet that customer demand,” he said. “We have important OEM customers, both data center and client, and that must be our priority to get the limited supply we have to those customers.”
Roadmaps altered
The company has made “decisive changes” to simplify its server road map, according to CEO Lip-Bu Tan. It will focus more closely on Diamond Rapids (Xeon gen 7) and accelerate delivery of Coral Rapids (Xeon 8), which will feature simultaneous multithreading (SMT), where one core can process two or more threads at once.
However, the company will not abandon its client business, Zinsner emphasized. “We can’t completely vacate the client market,” he said, “so we’re trying to support both as best we can, and obviously work our way out of this supply issue.”
That said, within the client segment, the company will particularly focus on mid- and high-end products (Core-series high-performance processors), as opposed to low end products (for less advanced PCs).
Intel is leaning heavily into AI PCs, having showcased its Core Ultra Series 3 (codenamed Panther Lake) at CES earlier this month, and said it is on track to release Nova Lake (its next mainstream client CPU following Core Ultra Series 3) this year.
“We now have a client road map that combines best-in-class performance with cost-optimized solutions,” said Tan.
The outlook for lower-end PCs
What does this mean for lower-end PCs? Zinsner acknowledged that “client CPU inventory is lean,” even amid excitement for Series 3. Further, “rising component pricing is a dynamic we continue to watch closely, especially relative to the client market.”
The Intel 18A node manufacturing process for Panther Lake is challenged with lower than expected yields, which “throttles output vs market demand,” said Info-Tech’s Bickley. “Coupled with a focus on their mid-high end markets, this makes the lower-end entry-level laptops and PCs materially more difficult to source.”
Anshel Sag, principal analyst at Moor Insights & Strategy, agreed there may be fewer low-end SKUs in 2026, and the ramp for products like Wildcat Lake, an entry-level Core Series 3 CPU, might be later in the year, or could slip into next year as 18A capacity increases.
Processors from AMD and Qualcomm could help address some of the shortfalls, especially in the mid-range, Sag forecasted; at the low end, more price-conscious users may push into Android via Google’s Project Aluminium and through partners like Mediatek, which currently rule that market.
As lower-cost inventory buffers are depleted, buyers can expect price increases ranging from 15% to 20% in 2026, with some brands “hiking prices higher to salvage margins,” said Bickley. He projects PC manufacturers will lean into the AI PC trend, focusing less on lower-cost models and shifting production to machines that utilize higher-end CPU chips and memory components.
However, he noted, “CPUs are not being cannibalized by GPUs. Instead, they have become ‘chokepoints’ in AI infrastructure.” For instance, CPUs such as Granite Rapids are essential in GPU clusters, and for handling agentic AI workloads and orchestrating distributed inference.
How pricing might increase for enterprises
Ultimately, rapid demand for higher-end offerings resulted in foundry shortages of Intel 10/7 nodes, Bickley noted, which represent the bulk of the company’s production volume. He pointed out that it can take up to three quarters for new server wafers to move through the fab process, so Intel will be “under the gun” until at least Q2 2026, when it projects an increase in chip production.
Meanwhile, manufacturing capacity for Xeon is currently sold out for 2026, with varying lead times by distributor, while custom silicon programs are seeing lead times of 6 to 8 months, with some orders rolling into 2027, Bickley said.
In the data center, memory is the key bottleneck, with expected price increases of more than 65% year over year in 2026 and up to 25% for NAND Flash, he noted. Some specific products have already seen price inflation of over 1,000% since 2025, and new greenfield capacity for memory is not expected until 2027 or 2028.
Moor’s Sag was a little more optimistic, forecasting that, on the client side, “memory prices will probably stabilize this year until more capacity comes online in 2027.”
How enterprises can prepare
Supplier diversification is the best solution for enterprises right now, Sag noted. While it might make things more complex, it also allows data center operators to better absorb price shocks because they can rebalance against suppliers who have either planned better or have more resilient supply chains.
Bickley urged enterprises to also establish hybrid AI strategies that split workloads between the cloud and client device PCs, to defer reliance on oversubscribed compute. Where possible, invest in memory optimization tools and extend refresh cycles for existing hardware to avoid the 2026 price peak, as well as auditing supply chains to gain earlier visibility to component risks.
Further, “shift to multi-year commitments and away from spot buying,” he advised. “This requires longer-term planning and strategic supply agreements to guarantee allocation in a capacity-limited environment.”
