Report: Server Chip Shortage Worsens, Intel and AMD in Tight Supply

It's no secret that the tech industry is facing shortages far and wide, with everything from the best graphics cards to gaming consoles and ICs being in short supply. According to a report from DigTimes today, when it comes to ICs for servers and datacenters, the problem is worsening, with delivery lead times for some critical server chips extending to 52 – 70 weeks. 

Modern servers use more components than an average consumer's PC. Despite manufacturers tending to prioritize their production, demand for datacenter machines is so high that there are widespread shortages. Leading Taiwanese server makers — Inventec, Mitac Computing and Wiwynn — are all complaining about undersupply of components, DigiTimes reported, citing unnamed "industry sources."

Inventec, for example, reportedly claimed that supply of server processors from Intel and AMD is tight. Both CPU makers usually give priority to production of high-margin server processors over regular chips, but it looks like this is not enough to meet demand. 

It takes over three months to build a complex chip (such as a CPU) using an advanced process technology. After, this IC needs to be tested and packaged, which extends lead time further. 

Inventec and Mitac Computing have been unable to fulfill all orders, since they could not get components, according to the report. This would naturally limit their ability to grow revenue, despite strong demand for their products. DigiTimes pointed to Mitac being unable to satisfy 20-30% of orders due to shortage of chips.  

Wiwynn, which mostly produces rack servers and has a customer base including Facebook, "has been undermined the most by the shortage of switches, as most of its orders are rack server systems, " according to DigiTimes, which added that the issue probably won't improve in 2021. 

Industry sources polled by DigiTimes indicated that shortages of server components are unlikely to ease until Q4 2021 or Q1 2022, but pessimists say they could extend through 2022, which is quite possible, particularly assuming a 70 week lead time.