Tariff pressure weakens demand for Intel’s AI chips

Intel is witnessing strong demand for its older Raptor Lake and Alder Lake processors, as buyers shy away from newer AI-enhanced chips like Meteor and Lunar Lake.

Economic concerns, particularly the threat of US tariffs, are prompting many to prioritise affordability over cutting-edge features, even in the fast-moving tech world.

Recent data suggests consumers remain unconvinced about paying extra for artificial intelligence in their devices. A survey of over 20,000 tech users found that 84% are unwilling to spend more for AI capabilities, reinforcing current market behaviour.

Intel has acknowledged that the pricing structure of its latest chips is less attractive to consumers and system manufacturers alike.

Adding to the challenge, Intel’s production of processors based on its Intel 7 process node is struggling to keep up with demand. Although its newer chips use TSMC’s advanced nodes, the surge in popularity of older-generation products is creating a supply strain.

Concerns over trade tensions and tariffs are fuelling inventory stockpiling, particularly for parts that help manufacturers keep costs low.

Meanwhile, Intel is undergoing significant internal changes. CEO Lip Bi-Tan confirmed workforce reductions, a major company restructure, and a push for employees on hybrid schedules to return to the office four days a week instead of three.

Combined with rising economic uncertainty and potential retaliatory tariffs from China, the company faces a complex and turbulent period ahead.

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