Advanced Micro Devices and Intel were among the few large-cap technology names to provide relief during an otherwise punishing week for the sector, after Nikkei Asia reported that both companies have communicated price increases for central processing units to their respective clients. AMD is raising prices starting in March, with Intel following in April.
The catalyst is a genuine supply crunch. According to the same Nikkei Asia report, CPU wait times at server manufacturers have expanded from a typical one to two weeks to eight to twelve weeks. Dell and HP have both acknowledged that CPU supply is lagging demand, and average price increases across the industry have already reached 10-15% this year, with some components seeing higher hikes than that. AMD and Intel both rose more than 6% during Wednesday’s session — a notable outperformance against a backdrop in which the broader Nasdaq was struggling for direction.
The memory sector, however, received an unwelcome jolt. Sandisk, Micron and Seagate Technology all pulled back after Google unveiled its new AI model, which includes a technique called TurboQuant — described by CNBC as focusing on reducing the “key value cache” that stores AI model calculations, with the goal of making large language models more efficient. If AI systems can be made to run with less memory, the long-term demand picture for memory manufacturers becomes more complicated.
Arm Holdings provided another positive story. Shares jumped 20% after the company announced it would begin manufacturing its own chips rather than purely licensing its chip architecture to others. Raymond James upgraded Arm to outperform with a $166 price target following the announcement, with analyst Simon Leopold writing: “We upgrade Arm to Outperform following the company’s announced business model shift to include a fabless semiconductor element. In our assumption of coverage, we advocated for Arm to go down this path because it would yield strong operating profit, aid growth and add a new dimension to the strategy.” The chip wars are intensifying on multiple fronts simultaneously, and the supply crunch story looks like it has further to run.
