How has the pain manifested in the data center industry, which exists solely to ensure computer processors can go on crunching numbers, uninterrupted?
The supply of server CPUs looks steady – mostly because they produce more profit for chip manufacturers than their other products, so they’ve been prioritized. Things look bleaker in other industry subsectors, companies have been spending a lot more time and money on supply chain management. Silicon for the data center provides good margin compared to more commoditized silicon, so chip fabrication companies like TSMC, Global Foundries, and Samsung Foundries prioritized these orders to everyone else.
Nevertheless, server chip vendors have been affected as well. Some necessary components to put together a CPU are in short supply, and now there’s a need to plan for many components with a 52-week lead time. COVID has resulted in substrate and wafer shortages and reduced assembly capacity. These have translated to protracted lead times for final products being delivered to customers and this is expected to be a “pain point” for the rest of the year.
As an example, executives from networking equipment vendors Cisco and Juniper also cited major semiconductor supply constraints on their most recent earnings calls.
Power equipment is about to get more expensive! Vertiv, one of the biggest sellers of data center power and cooling equipment, to delay previously planned “footprint optimization programs.” According to the company’s CEO, Robert Johnson, the combination of supply chain constraints and inflation would cause “some incremental unexpected costs over the short term”, again due to some parts and materials shortages. Part of the solution will be “to share the cost with our customers where possible.
2022? 2023? No One Knows. There isn’t a clear picture of how the situation will continue playing out and, most importantly, when supply chains might get back to normal. All types of computing devices are in high demand, and COVID has actually accelerated people’s refresh cycles and purchasing cycles. But capacity at the foundries doesn’t accelerate overnight. Because it takes so long to expand manufacturing capacity and because demand for computing isn’t slowing down, it’s anyone’s guess when supply chain pressure might ease. Estimates have ranged even to mid-2022 to 2023.