Lenovo Exec Sees AI Demand Straining High-End CPU Supply Amid Memory Crunch

Lenovo’s Vlad Rozanovich tells CRN that supply issues for CPUs, GPUs, SmartNICs and memory chips prompted the vendor last month to inform some channel partners and customers that it may not be able to ship certain data center products ‘within the next six months.’

The head of Lenovo’s data center sales said the AI data center boom is straining supply of high-end server CPUs—even as Intel prioritizes production for such components.

In an interview with CRN last month, Lenovo sales leader Vlad Rozanovich said the company is “starting to see tightness on ‘Granite Rapids’ in some areas,” particularly higher-end models in Intel’s Xeon 6 performance-core CPU lineup such as the Xeon 6700P segment.

[Related: HP Chief Commercial Officer: Memory Crunch Unlikely To Ease For ‘Many’ Quarters, ‘Creative’ Offsets Available]

Chips like these fall “along the lines of what gets put in the GPU servers” for AI workloads, added Rozanovich, who is senior vice president of Lenovo’s Infrastructure Solutions Group.

“As GPU servers have seen an uplift [in demand], some of those CPUs that are associated with those GPU servers are seeing that same type of heavily or moderately constrained environment as well,” the executive said.

Intel Global Channel Chief Dave Guzzi told CRN in February that the CPU shortage is likely impacting every partner “across the board,” including OEMs. The situation has prompted it to prioritize production of server CPUs as well as midrange and high-end client CPUs. The company has said that it expected production capacity to improve starting this month.

Lenovo Partner Says CPU Shortage Can Be Mitigated

Chris Bogan, an executive at Lenovo systems integration partner Mark III Systems, told CRN that he’s seeing the impact of CPU supply issues.

However, he noted that his Houston-based company has been able to mitigate such issues through “communication and strength of relationships,” which includes looking at product configurations that are more readily available.

“Most of the time we’re able to get exactly what we’re looking for, but we’re also working with customers, and most of them, when you understand what the project entails and what the real requirements are, you can make those shifts to where it doesn’t impact the project itself or the performance that was expected,” said Bogan, who is Mark III’s vice president of alliances.

CPU Shortage Prompts Some To Look At Older Products

Rozanovich suggested that supply issues with Intel’s latest Xeon CPU products is prompting some customers to look at older generations, including the fifth-generation Xeon “Emerald Rapids” chips and even the second-generation Xeon “Cascade Lake” lineup.

Intel is expected to make its final shipments of the latter group of chips by October after the company discontinued the lineup more than two years ago.

“We’re also seeing more customers ask about AMD as part of that too. Not that they’re immune to this,” the executive said.

According to Rozanovich, the CPU shortage is happening alongside supply constraints for GPUs, Nvidia’s Mellanox ConnectX SmartNICs and memory chips, the latter of which has driven much of the supply and pricing volatility for hardware over the past few months.

Supply Issues Push Some Lead Times To Over Six Months

These supply issues prompted Lenovo last month to inform some channel partners and customers that it may not be able to ship certain data center products “within the next six months,” according to Rozanovich.

To get faster ship times, the tech giant has suggested to partners and customers that they change the configurations of these products, whether that results in something that is less performant or something that requires more energy consumption. In the latter case, this would result in higher prices, which Rozanovich said isn’t always a problem.

“Continuity of supply is the most important thing right now, especially for those customers who are saying, ‘I need it. I can’t wait.’ And supply continuity is trumping price in some cases,” he said.

Flexibility, Forecasting Will Help Partners Navigate Supply Issues

With supply and pricing volatility dragging down margins for partners in myriad ways—as CRN detailed in its cover story last month—Rozanovich said it’s important for the channel to be flexible with the kinds of product configurations they are ordering for customers.

It’s with this in mind that Rozanovich echoed what other Lenovo executives have stated in the past few months: Seek out data center products in its “top-choice express program” to ensure that price quotes stay valid for 30 days and products ship within 10 days.

The long-price-quote windows and short shipment turnarounds stand in contrast to the fast-changing prices and long lead times the channel is facing elsewhere, largely due to the memory shortage and other component supply issues.

“The channel is loving it right now,” Rozanovich said of the top-choice express program.

The executive said it’s also critical for partners to get forecasts from customers on the products they will need for the rest of the year. That can help partners pull in orders for customers, when possible, to avoid future price increases.

Stocking Programs Present Channel Margin Opportunities

If partners have customers that know they might want to buy products later, they could also hold such products in inventory, which comes with margin opportunities, Rozanovich said.

“There’s going to be inventory carrying costs on that channel partner,” he said.

“But there is a potential that they can not only have a very good price for a customer later in the year, but they could potentially even price higher based off of where market pricing is at that point in time,” the executive added.