Intel raises CPU prices by another 10% and plans to phase out low-margin products.

Intel is reshaping the profit structure of its CPU business by raising prices and cutting product lines.

On September 8, according to supply chain sources speaking to Taiwan's DigiTimes, Intel's PC CPUs are expected to see another price increase of approximately 10% on October 5, 2026. This would be Intel's third round of price hikes since the end of 2025—a roughly 10% increase in the first quarter of 2026, followed by another price increase in July for some consumer and server-grade CPUs, with increases ranging from tens to over a thousand US dollars.

Meanwhile, Intel CEO Lip-Bu Tan is reviewing the low-margin Small Core product line, with some products potentially entering the End of Life (EOL) phase. Supply chain sources indicate that these actions all point to the same goal: improving overall gross margins and moving away from the past market strategy of trading price for volume.

Price increase logic: Gross profit takes precedence, market share is sacrificed.

Supply chain operators say that Intel's continued price increases are due to rising overall supply chain costs and strong demand for some products.

In terms of market size, global PC shipments are projected to reach approximately 260 million units in 2026, with a slight decline to around 250 million units in 2027. Industry insiders point out that the main reason for weakening demand is not a rapid contraction in the PC market, but rather the recent excessive price increases in components such as memory and PCBs, leading to a continuous accumulation of cost pressures on end products.

Against this backdrop, Intel's decision to raise CPU prices indicates that its strategic focus has shifted from "gaining market share" to "improving profitability."

According to supply chain analysis, if Intel can regain nearly 200 million CPU shipments in the approximately 250 million PC market, its market share is expected to rebound to around 78%. Based on this, the profitability of its PC CPU business will significantly improve by increasing the average selling price (ASP).

Cutting low-margin products: A gap may appear in the IPC and IoT market.

In addition to raising prices, Lip-Bu Tan has also made his review standards for the product line more direct.

According to supply chain sources, the Small Core product line will face discontinuation and withdrawal from the market if its gross margin is too low. Compared to Intel's past practice of retaining a large number of products to maintain platform integrity and meet customer needs, this strategy explicitly uses profit contribution as the core criterion for product retention or withdrawal.

The impact is not on mainstream consumer PCs, but rather on long-lifecycle markets such as industrial PCs (IPCs), Internet of Things (IoT), and embedded systems. Customers in these markets prioritize cost, power consumption, delivery time, and platform stability, and have relatively limited demand for the latest manufacturing processes and highest performance. As a result, the gross profit margins of related products are already lower than those of high-end PCs and server CPUs.

Supply chain analysis suggests that once Intel exits this market segment, the resulting demand will provide opportunities for ARM-based manufacturers such as Qualcomm and MediaTek. ARM SoCs, in particular, offer advantages in high integration and low power consumption in IPC, edge computing, and IoT fields.

Currently, Chen Liwu's product review is still focused on the CPU business; chipsets, LAN, and Wi-Fi product lines have not yet been included in the same level of gross profit review. Supply chain sources point out that if the same standards are subsequently extended to these product lines, the impact of Intel's product adjustments on the IC design industry will be more significant.

Organizational slimming continues to advance

While adjusting its product strategy, Intel is also simultaneously carrying out organizational restructuring.

It is reported that after Chen Liwu took over, he vigorously promoted organizational reform to address long-standing issues of bureaucracy and inefficiency, drastically reducing the management hierarchy from 12 levels to 6, and further reducing the total number of employees to approximately 80,000. In July, Intel launched another round of layoffs in its Data Center and Artificial Intelligence (DCAI) division, with the current global workforce estimated at approximately 75,000.

Market rumors suggest that Intel's ultimate goal is to cut another 5% to 10% of its workforce. However, some supply chain sources believe that Intel will also recruit new talent while laying off employees, so reducing the workforce to over 70,000 would be a reasonable range.

Server CPUs: A More Troublesome Manufacturing Dilemma

Compared to PC CPUs, Intel's bigger challenge now comes from server CPUs.

Supply chain sources indicate that Intel's own wafer fabs are currently prioritizing server CPU production, and their profit margins are higher than those of products manufactured by TSMC. However, server CPU production capacity remains insufficient to meet demand, putting pressure on PC CPU production capacity. To accelerate server CPU output, Intel may need to shift some orders to TSMC, creating a manufacturing dilemma. Meanwhile, the yield rate of Intel's 18A process and the progress of its 14A process continue to be closely watched by the market.

Regarding the new product launch schedule, industry sources revealed that Intel and AMD plan to launch their major new products in March and June-July 2027, respectively. The staggered launch dates of the two companies' new platforms will help maintain the PC market's momentum throughout the year and encourage brand manufacturers and distributors to stock up in advance, thereby driving a recovery in demand for PC and motherboard supply chains.

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