Shortage of server chips could carry on through the rest of 2021

The tech industry was hit hard by the pandemic and the subsequent server chip shortage. Reports state that industry insiders are now expecting the shortage of critical components in server chips, which has been fuelled by a wider global shortage, to carry on till Q4 2021 or even Q1 2022. Some have even suggested that the server chip shortage might carry on well into 2022 as well. The ongoing server chip shortage is a result of the Covid-19 pandemic that hit the world last year and brought in lockdowns across the globe.

A sharp spike in work-from-home requirements, that mostly included devices like smartphones, tablets, laptops, and PCs, along with an unprecedented drought in Taiwan, which is the chip manufacturing hub, has wrecked havoc on the semiconductor supply chain and left the industry reeling. Reports from DigiTimes about “shortages of server ICs constraining server Original Design Manufacturers’ (ODMs’) shipment growth in the third quarter of 2021” indicate that the problem is just getting worse with delivery lead times for some of the most critical server chips ranging between 52 weeks and 70 weeks.

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DigiTimes has quoted industry sources who said that the lack of supply of critical components is affecting ODMs like Inventec and Mitac Computing and these companies have been unable to fulfill their orders on time. The number of unfulfilled orders for Mitac is as high as 20-30% according to reports.

According to Toms’s Hardware, modern serves use more components than an average consumer PC. And it takes, on average, over three months to build a complex computer chip like the CPU. This timeframe is without taking into account the time it takes to test the chip, package it, and then ship it out. As per reports, despite prioritising chip production, manufacturers like AMD and Intel “are struggling to meet demands for the components for use in data center machines, which is still massively outweighed by the supply”.

Besides chips used in CPUs, DigiTimes also reported about Wiwynn, the company that produces rack servers for companies like Facebook, etc. Wiwynn has been unable to meet orders due to the lack of switches.