Intel shifts PC chip production to servers as AI demand surges

Intel is shifting production resources from consumer PC processors to server chips, citing shrinking PC demand and surging AI-driven demand for data center processors. The company expects the PC market decline to continue in coming quarters. Intel is expanding its Fab 24 facility in Ireland for Xeon processors and accelerating equipment installation at Fab 62 in Arizona for 18A-node chips. Its Data Center and AI division reported $7.3 billion in Q3 revenue, up 17% quarter-over-quarter and 80% year-over-year. The company also plans to repurpose some Oregon production lines from client chips to server processors. Intel expects server processor supply to remain tight through the first half of 2027, with shortages of organic substrates and advanced packaging capacity as key constraints. Capital expenditures are projected at about $20 billion in 2026, with further increases planned for 2027.