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Is it bad if my processor frequently approaches or reaches its maximum temperature?
Not necessarily. Many Intel® processors make use of Intel® Turbo Boost Technology, which allows them to operate at very high frequency for a short amount of time. When the processor is operating at or near its maximum frequency it's possible for the temperature to climb very rapidly and quickly reach its maximum temperature. In sustained workloads, it's possible the processor will operate at or near its maximum temperature limit. Being at maximum temperature while running a workload isn't necessarily cause for concern. Intel processors constantly monitor their temperature and can very rapidly adjust their frequency and power consumption to prevent overheating and damage.
TjMAX for these CPUs is generally around 100C (IIRC package temperature [design] limit 72C though so you might be getting some throttling) - as long as you are under that it is operating in spec - though generally lower is better for long term lifespan.
How can I check for possible throttling?
It is absolutely safe, but still your temperatures arent what id call normal. My 12900k on a u12a rarely exceeds 60 when gaming.
What case are you using and what is your ambient? Also do you have your aio as exhaust? If yes, that explains the temperatures
The case is an iCUE 220T and yes the AIO is set to exhaust at the top. So I have three fans at the front of the case sucking in cool air, then two fans from the AIO at the top and one at the rear is exhaust. Is that OK?
1.29v looks like a good bet in this detailed guide.Does lowering the voltage give the CPU less current and so runs cooler? wont that affect performance though?
Given that you have top exhaust aio makes sense that your temps are on the high side, since the heat of the cpu gets exhausted through the radiator.
You fan undervolt without losing any performance but it wont change much, its your gpu heating up the radiator that causes high temps in gaming
Install HWINFO64.
No Alder Lake expert, but nudging 1.35v @ 4.8?? Seems high to me.