The cost of buying servers for business will inevitably rise as a result of US President Donald Trump's trade policies, at least in the short term, as uncertainty grips the supply chain.
The White House last night announced a base tariff of ten percent on all imports into the US from April 5. On April 9, the US will then add "reciprocal tariffs" on many nations in repost to these countries' own import duties. The tech hardware world's major producers including China, Thailand, Vitenam and Taiwan are among those hardest hit.
This comes after Trump told a press event last week that he intends to impose tariffs on semiconductors produced outside the US, having previously called for a 25 percent levy on processors, for example.
According to some experts, tariffs on Chinese chips would not have much of an impact in the US, but Taiwan, Japan, or Korea are the sources for a large proportion of the memory and processor chips that go into products such as servers.
"I do think that there could be some short-term impacts," AMD chief Lisa Su said in an interview this week. "I think it's too early to say what the longer-term impacts are. I think we have to look at how things play out over the next number of months."
AMD processors accounted for nearly a quarter of all x86 server chips sold in Q3 of 2024, but these are manufactured for the company by TSMC in Taiwan.
HPE has already warned that it expects its revenue for Q2 2025 to take a hit because of expectations that Trump's trade policies will affect supply chains.
"Recent tariff announcements have created uncertainty for our industry, primarily affecting our server business," HPE chief financial officer Marie Myers said on a conference call with analysts in March. "We are working on plans to mitigate these impacts through supply chain measures and pricing actions," she added.
Dell said it too would likely have to raise prices in response to tariffs during its most recent earnings call.
"We built an industry-leading supply chain that's globally diverse, agile, resilient that helps us minimize the impacts of trade regulations, tariffs to our customers and shareholders," said vice chairman and chief operating officer Jeff Clarke.
But he added that "whatever tariff we cannot mitigate, we view that as an input cost and as our input costs go up, it may require us to adjust prices. That's what we've done in the past. I can't imagine we're going to do anything differently."
Lenovo, however, seemed almost dismissive of the impact of tariffs when asked about them during its most recent earnings call.
CEO Yuanqing Yang pointed to Lenovo's global manufacturing footprint, which he claimed would help it offset any impact.
"Compared to our competition, we are more flexible and resilient to adapt to different scenarios," he said. "So we are pretty sure, not only can we ensure our competitiveness in the market, but also protect our profit and performance."
US-based Supermicro, which sells servers to hyperscalers, was more tight-lipped. It told The Register: "The company is actively tracking the dynamic situation with trade and tariffs, cooperating with the appropriate government agencies, and we will communicate any future impacts accordingly."
Analyst IDC recently reported that the worldwide server market reached a record $77.3 billion dollars in revenue for the final quarter of 2024, representing a year-on-year growth rate of 91 percent.
We asked if IDC had noticed any impact from the announcement of tariffs, such as suppliers stockpiling inventory in the US before they kick in.
"It is too early to tell," said Lidice Fernandez, Group Vice President for WW Enterprise Infrastructure. "There have been announcements from several companies with plans to open facilities in the US to avoid tariffs but as it relates to servers that could take years, so it won't be an immediate shift. We are expecting the increasing costs to be passed down to end users, and so far, there is no indication of stockpiling but that could change in the near future. Companies are still adjusting to the new reality."
Server and datacenter watchers at Omdia told us that vendor sales figures for the first quarter are not due until June, so we aren't likely to get a clear picture of any impact until then.
"We are yet to see any price hikes in the server market yet. The server supply chain and even manufacturing is mainly in Taiwan and the Taiwanese vendors are preparing to face the situation," said Manoj Sukumaran, Principal Analyst for Datacenter IT.
The overheads will likely become a concern for end users rather than the vendors themselves, he said.
"The server supply chain has become very complex with the advent of AI servers, which are becoming rack-scale systems (like NVL72) now, and the vendor pool is very limited unlike general-purpose servers. Also, it is not easy to move the manufacturing to another country all of a sudden and it would take quite a lot of time."
The unpredictable, stop-start nature of the new trade policies also doesn't help, with Trump announcing tariffs one day, only to put them on hold the next.
Synergy Research Chief Analyst John Dinsdale told us that the uncertainty is the worst aspect for most in the industry.
"Generally speaking, if there is one thing that business people hate, it is uncertainty. In many ways, uncertainty is worse than known bad news. So I have absolutely no doubt that datacenter operators and associated equipment vendors are taking measures to alleviate any issues that may arise," he said. ®