Research|INTC: Muse Drives CPU Demand and Price Hikes Expand Upside; Foundry Execution on Track

Based on the case study library from our recently published META report, Meta Muse handles a substantial volume of high-frequency tasks, such as cross-platform price comparisons (e.g., up to 146 searches for a single travel itinerary), processing massive email backlogs, and automated phone negotiations. Because Meta proactively provisions persistent cloud-based execution environments for user agents, relying on headless browser automation and high-frequency API orchestration, the compute workload shifts heavily back to the CPU. If Muse reaches broad penetration across Meta’s social ecosystem, it will create substantial server CPU demand, keeping supply tight and supporting price hikes.

Intel CEO Lip-Bu Tan also noted that, driven by AI inference, the spread of agentic architectures, and a general-purpose compute refresh cycle, current CPU demand far outstrips capacity, and the company can fulfill only ~50% of customer orders. This pronounced supply-demand gap grants the company strong pricing power: Intel is expected to raise PC CPU prices by ~10% in October, and our channel checks indicate server CPUs will also undergo another round of price hikes of at least 15% in 26Q4.

On the Foundry front, driven by robust internal CPU demand and the need to support future external foundry customers, Intel plans to expand combined Intel 3 and Intel 18A capacity by 40%/30% YoY in 2027/2028. In terms of customer traction, beyond ongoing collaborations with SK Hynix and Micron on HBM base dies, CSPs and frontier AI labs have entered the customer pipeline (with tape-outs expected in 2028 upon successful order conversion). In addition, to diversify manufacturing risk, Tesla plans to multi-source its AI6 chip across Intel, TSMC, and Samsung, a sign that Intel Foundry continues to add customers and deepen external partnerships.

New Round of CPU Price Hikes Underway

Intel CEO Lip-Bu Tan highlighted a severe supply shortage in server CPUs, with Intel’s existing capacity fulfilling only ~50% of actual customer demand. According to reports, Intel will raise PC CPU prices by approximately 10% effective October 5. This marks the third round of price increases following minor adjustments earlier this year and in July. On the server CPU side, beyond prior hikes, our channel checks lead us to believe that prices will increase again in 26Q4 by at least 15%.

Intel Foundry