Data Centers Are Next to Feel the Supply Chain Constraints
Discussions, news articles, and reports have been heavily focused on the supply chain over the past two years. While many industries have been part of the hot topic, such as the automotive sector and consumer electronics, data centers have been relatively quiet. Now that’s all changing.
During this tumultuous time, “the global supply chain crisis has done little to slow down the accelerating torrent of data center development, as facilities continued to come online at a record pace throughout 2021” (Bisnow). However, rising costs and extended lead times are finally starting to be felt.
Size Matters
Cloud providers and hyperscalers have managed well during the pandemic and shortage. Many of which can contribute that to their size, pocketbook, and ability to implement new models relatively quickly. “Large data providers have remained relatively insulated from the global crisis due to their purchasing power, as suppliers prioritized their largest customers” (Bisnow). However, smaller companies and ones with smaller budgets were deprioritized.
With manufacturing capacity being one of the hottest commodities in the supply chain, smaller data centers are taking matters into their own hands. To avoid additional disruptions, they are designing custom equipment and parts that no longer compete with the big players.
52 Week Lead Times
As we exit the Chinese New Year, we’re emerging into a marketplace that is every bit as challenging as before. While many of the manufacturers and parts that were experiencing shortages are relatively stable, the increased pricing and lead times are concerning.
“Some companies up and down the data center supply chain [indicated] that shipments they needed, or shipments of their own equipment are encountering delays and that issues with availability of their downstream suppliers have been exacerbated since October,” said Jonathan Atkin, who heads the Communications Infrastructure Investment Research practice at RBC Capital Markets.
Extended lead times, reaching out to 52 weeks and beyond, are being felt throughout the electronics industry and are now impacting data centers. The ripple effects of issues such as substrate and wafer shortages along with reduced fab capacity and manpower will lead to this “pain point” being felt for some time.
Recover & Rebalance
While the world attempts to recover and rebalance from the shortage, these efforts take some time. For example, it takes time to build additional factories and fab capacity. All the same time, there are M&As happening that will impact the supply chain further.
One thing remains, visibility and diversifying your supply chain is key to success. Working with a connected distributor and partner like Converge provides data centers with invaluable insight into the market and an action plan to solve the future.
Read more:
‘It’s Little Things’ – How the Chip Shortage Is Affecting the Data Center Industry
‘Are We In Trouble Now?’ Data Centers Are About To Finally Feel The Supply Chain Pinch