Server CPU Shortages Add to Datacenter Supply Chain Crisis, Prices Set to Rise

The datacenter industry is facing a mounting supply chain crisis as server CPUs join memory components in experiencing severe shortages, pushing up prices and threatening to disrupt ongoing datacenter projects. According to a new report from analyst firm Omdia, the double whammy of CPU and memory constraints will hit datacenter operators this year, even as overall server shipments are still expected to grow at a double-digit rate.

The CPU shortage stems from the complex nature of modern processor manufacturing. As CPU roadmaps have broadened, vendors are simultaneously manufacturing processors on different process nodes such as 3 nm or 5 nm. "The nature of processor design and fabrication is such that shifting volume across process nodes is complex and time consuming," Omdia explains. The firm also suggests that lower-than-expected yields may have contributed to the shortage.

This manufacturing complexity has created a perfect storm. While memory shortages have dominated recent headlines - with DRAM costs expected to nearly double this quarter and NAND flash forecast to rise by more than 30 percent - the addition of CPU constraints creates a compounding problem for datacenter operators.

Omdia estimates that server CPU prices could increase by 11 to 15 percent as a consequence of the shortfall in supply. This conservative estimate assumes that the biggest customers - the hyperscale cloud operators - will typically have fixed their prices beforehand through long-term agreements with vendors. Smaller operators and enterprises may face even steeper price increases.

The memory shortage is particularly acute because chipmakers have repurposed manufacturing capacity to focus on high-margin products such as high-bandwidth memory (HBM) used in GPU accelerators for AI processing. This shift has created a bottleneck for standard DRAM, which is still essential for general-purpose servers.

Omdia expresses concern that memory availability could disrupt server manufacturing output, which might in turn affect the completion dates for ongoing datacenter projects. Despite these challenges, the analyst firm still foresees a 12 percent growth in server shipments this year, thanks to a refresh cycle covering general-purpose servers that is also boosting shipments.

When it comes to AI infrastructure, the picture is equally complex. Omdia estimates that at least 71,000 racks will ship this year with more than 100 kW of IT load, largely driven by Nvidia's NVL72 integrated system. The demand for AI infrastructure appears insatiable, with forecasts predicting a 56 percent increase in these high-density racks next year, and the first ultra-dense racks with upwards of 200 kW of equipment.

The situation is evolving rapidly. Last year, Google detailed plans for future 1 MW IT racks at the Open Compute Project (OCP) Summit in Dublin, suggesting that power density in datacenters will continue to increase dramatically.

For datacenter operators and IT procurement teams, the message is clear: plan for higher costs, longer lead times, and potential project delays. The combination of CPU and memory shortages creates a particularly challenging environment where traditional supply chain management strategies may need to be rethought.

As the industry grapples with these constraints, the focus on AI infrastructure continues to drive innovation in cooling, power delivery, and system design. However, the fundamental challenge of manufacturing enough components to meet demand remains, and it's likely to shape the datacenter landscape for the foreseeable future.