Enterprise looking to buy data-center switches face longer lead times and lack of stock over the course of the next year or so as demand continues to substantially outpace supply, according to a report from the Dell’Oro Group.
Sameh Boujelbene, leader of the analyst firm’s campus and data-center research team, said that one canary in the coal mine was Broadcom’s announcement earlier this year that 90% of its total chip output for 2021 had been spoken for as early as March. That’s the result not just of material shortages that have affected the semiconductor market as a whole, but of human behaviors that arose in response.
Whether they’re smaller enterprises or big hyperscalers building out capacity, IT decision makers tend to rush into pre-orders whenever headlines about shortages appear, Boujelbene said, and Dell’Oro projects that will true in 2022.
“So supply is decreasing and demand is increasing,” she said. “There’s a belief that things will get worse in the second half of the year, but no consensus on when it’ll start getting better.”
Pre-crisis, the average shipping time for data-center switches was four to eight weeks, and now it’s roughly double that, Boujelbene said. That means enterprise customers in particular could be waiting up to several months for new equipment, and even cloud service providers could face substantial delays.
“It’s an industry-wide problem,” she said. “There’s no single reason that crisis happened—demand is coming back from automobile makers, and on the networking side, ZTE and Huawei were stockpiling chips ahead of the US sanctions.”
Even though the stockpiling happened last year, Dell’Oro believes it will continue to have a serious effect on the supply chain for years to come, Boujelbene said.
WLAN shortages are likely to be particularly acute, while core switching might be somewhat less affected, according to Dell’Oro’s research. But even that is an uncertain forecast. “It could be that [switch-demand] recovery lagged behind that of WLAN,” she said, meaning that demand might only just now be springing up again.
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