Intel plans October CPU price hike and may axe low-margin products
Intel reportedly plans to grow margins with fresh CPU price increases and discontinuing low-margin products
According to a report from Digitimes, Intel is planning to implement another 10% price increase for its CPUs in early October. This follows a series of price increases that started in early 2025. Part of the reason is growing datacenter product demand and rising component and material costs. Another factor is Intel’s desire to increase its margins, which is why Intel reportedly plans to discontinue certain low-margin products.
Intel CEO Lip-Bu Tan reportedly wants to grow the company’s gross margins and increase profitability. This is despite the fact that the PC market is expected to decline in 2027. Note that this decline is primarily due to rising PC prices, which are forcing consumers and businesses to forgo hardware upgrades. With high demand for server CPUs, Intel is capacity constrained, making the consumer PC market’s expected decline a smaller factor than it otherwise would be for Intel.
Right now, Intel is working to build more of its CPUs using its own fabs. By using its own infrastructure, Intel can achieve higher margins on its product. Using TSMC, an external fab, costs Intel more. After all, using TSMC means that Intel needs to pay TSMC. Using its own fabs lets Intel use its own technology and increase its margins. That said, Intel needs to keep up with demand, so more orders from TSMC may be inevitable.
Industry insiders point out that Intel has been raising PC CPU prices over the past year in response to soaring overall costs, with another 10% increase tentatively scheduled for early October. Given the estimated slight decline in the PC market in 2027, Intel’s decision to raise CPU prices demonstrates that increasing gross margins is its primary objective, and the past practice of undercutting prices to gain market share is no longer prevalent.
– Digitimes TW – Translated
Intel may discontinue low-margin products
Intel is reportedly considering plans to EOL (End-of-Life) its “Small Core” processors due to their low margins. These products are primarily used in embedded PCs, Internet of Things (IoT) devices, and industrial PCs. That said, some low-cost laptops also use these older CPUs. That said, these products may remain available if their margins are high enough. Intel’s longstanding relationships with the companies that use these “Small Core” products may also play a role in their continued support. Regardless, Intel may be keen to push these customers to newer, more profitable processors, or exit this area of the CPU market.
Supply chain sources indicate that Small Core processors may face end-of-life (EOL) if their gross margin is too low. Compared to Intel’s past strategy of retaining a large number of products to maintain platform integrity and meet customer needs, this strategy focuses on profit contribution.
– Digitimes TW – Translated
Right now, Intel’s focus is on the most profitable parts of its business. Bringing more of Intel’s production back to its fabs is a priority, as is growing the company’s margins. With Intel’s next-generation Xeon and Core CPUs, expect Intel to use its 18A-P lithography node, transitioning away from TSMC silicon. This move will boost Intel’s margins, as it prevents Intel’s revenue from flowing to TSMC as profit. With this in mind, Intel Foundry growth and improved CPU yields will be priorities for Intel moving forward.
Join the discussion on Intel’s rumoured business changes on the OC3D Forums.
