US President Donald Trump’s trade policies will inevitably lead to higher prices for business servers, at least in the short term, as uncertainty spreads through the supply chain, experts say, as reported by The Register.
The White House imposed a basic tariff of 10% on all imports on April 5. Then, on April 9, the US will add “reciprocal tariffs” for many countries in response to those countries’ own import duties. The biggest hit will be the world’s largest tech equipment manufacturers, including China, Thailand, Vietnam and Taiwan.
Trump had previously announced his intention to impose tariffs on semiconductors manufactured outside the United States, and called for a 25 percent levy on processors. Experts say tariffs on chips from China will have no impact on the United States, but the same cannot be said for Taiwan, Japan, or South Korea, where most of the memory chips and processors used in those same servers are made.
Image source: Joseph Corl / Unsplash
«”I do think there could be some short-term impact,” AMD CEO Lisa Su said last week, adding that it was too early to tell what the long-term impact would be until the next few months. AMD’s processors account for nearly a quarter of all x86 server chips sold in the third quarter of 2024, and they are made by TSMC in Taiwan.
HPE said it expects revenue to decline in the second quarter of 2025 due to the negative impact of Trump’s trade policies on supply chains. “Recent tariff announcements have created uncertainty for our industry, particularly impacting our server business,” HPE CFO Marie Myers said on a conference call with analysts in March. She noted that the company is working on plans to mitigate the impact through supply chain optimization and pricing.
Dell said in its latest quarterly earnings call that it also will likely have to raise prices because of the tariffs. Vice Chairman and Chief Operating Officer Jeff Clarke said the company’s industry-leading supply chain helps minimize the impact of trade rules and tariffs on its customers and shareholders, but that prices will still have to adjust as costs rise.
Image source: erika m / Unsplash
Unlike many other companies, Chinese manufacturer Lenovo remains optimistic. Lenovo CEO Yuanqing Yang said that its global presence, as well as flexibility and resilience, will help the company adapt to different scenarios. “We are confident that we can not only ensure our competitiveness in the market, but also protect our profits and productivity,” the CEO said.
U.S.-based Supermicro, which supplies servers to hyperscalers, was more measured in its response. “The company is actively monitoring trade and tariff developments, working with government agencies, and we will communicate any future impacts accordingly,” a spokesperson told The Register.
According to IDC, the worldwide server market is set to reach a record $77.3 billion in revenue in Q4 2024, representing year-over-year growth of 91%. The Register asked IDC if it had seen any impact from the tariff announcement, such as suppliers stockpiling inventory in the U.S. before they went into effect. “It’s too early to tell,” said Lidice Fernandez, group vice president for WW Enterprise Infrastructure. She noted that several companies have announced plans to open U.S. facilities to avoid the tariffs, but since they’re in server manufacturing, that could take years. “We expect the increased costs to be passed on to end users, and there’s no sign of stockpiling yet, but that could change in the near future. Companies are still adjusting to the new reality,” Fernandez said.
Image source: Russell Ferrer / Unsplash
Server and data center market tracker Omdia said that vendor sales data for Q1 will not be released until June, so it is unlikely to get a clear picture of any impact from tariffs. “We have not seen any price hikes in the server market yet. The server supply chain and manufacturing is largely in Taiwan, and Taiwanese vendors are preparing for this situation,” said Manoj Sukumaran, principal analyst at Datacenter IT. He said that the increase in tariffs will be a customer issue, not a vendor issue. “The server supply chain has become very complex with the advent of AI servers, which are now becoming rack-mounted systems (e.g. NVL72), and the pool of vendors is very limited compared to general-purpose servers. Also, it is not easy to suddenly move manufacturing to another country, and it will take quite a long time,” the analyst said.
Experts are most concerned about the uncertainty of the situation, as Trump could announce a rate hike one day and then reverse it the next. John Dinsdale, chief analyst at Synergy Research, told The Register that uncertainty is the worst part for most in the industry. “In many ways, uncertainty is worse than known bad news. So I have no doubt that data center operators and equipment suppliers are taking steps to mitigate any issues that may arise,” he said.