Cisco Revises Partner Contract Terms In Response To Soaring Memory Prices

Cisco’s compute order cancellations policy now states that the company has the right to cancel compute orders up to 45 days before shipment, among other changes, as memory price hikes hit the tech industry.

Cisco is adjusting contract terms in the wake of rapidly rising memory costs, the tech giant said in a note to partners sent this week.

The change to the compute order cancellations policy now states that Cisco has the right to cancel compute orders up to 45 days before shipment. Cisco also said that it reserves the right to adjust pricing on compute orders in the event of significant increases in component costs, manufacturing costs, tariffs, exchange rate fluctuations, or other external factors beyond Cisco’s control that may occur between the order date and the shipment date. Lastly, the company revealed plans to change its quote price protection period without disclosing further details, however, Tim Coogan, senior vice president of Cisco’s global partner sales, said in the note that the company will “work with our partners and distributors to operationalize.”

CRN has reached out to Cisco but did not hear back by press time.

“The global IT sector continues to navigate significant supply constraints and escalating costs, largely driven by the rapid growth in AI-driven demand. Industry-wide, requirements for memory and storage have outpaced production capacity, resulting in extended lead times, constrained supply, and rising costs. This is a global challenge impacting the broader server and infrastructure ecosystem, and Cisco is taking disciplined steps to navigate these conditions responsibly,” Coogan said in his note to partners.

The Cisco policy changes come after HPE’s note to partners last week that it can cancel orders up until the day of shipment on server and GreenLake orders.

The updates to Cisco’s pricing and compute order cancellation policies are effective immediately, the company said.

One CEO at a Cisco partner told CRN that the latest Cisco move represents “economics 101” but had more questions.

“I think right now, it’s just the reality of business, supply and demand. It’s economics 101, so the question is: What does it really mean? What does our pipeline look like? What are the needs for our customers for compute? We need to know this so we can prepare ourselves and our customers and frankly, not get stuck, because then we’ll have to change the language in our own quotes,” said Faisal Bhutto, president and CEO of Houston-based MSP and Cisco partner Alykas.

Every time supply chain issues affect a vendor’s product availability and pricing, it’s important that manufacturers set expectations with partners as soon as possible, Bhutto said. The supply chain shortages that hit the tech market during the COVID-19 pandemic, which greatly affected availability of routers, firewalls and Meraki products, for example, was a “massive hit” since lead times were in excess of six months at the time, he added.

“That required an education,” he said.

While Cisco channel chief Coogan noted plans to change the quote price protection period, there’s little clarity on what exactly that means for partners, Bhutto said.

“Is a quote good for 21 days, seven days, three days? I don’t know what that means [and] I wonder how quickly Cisco can tell us,” he said. “That will be a very critical piece of information that they can tell us so we can prep our clients.”

Bhutto stressed that ongoing, proactive communication and clarity will be crucial between Cisco and partners as these solution providers manage customer expectations amidst supply chain volatility.

“COVID wasn’t that long ago, so we know how to have that conversation [with customers,]” he said. “I’m glad Cisco is showing some proactivity around this issue,” he added.

Another partner that spoke under the condition of anonymity called Cisco’s new policies “generous,” noting that other networking and infrastructure vendors have reduced their order cancellation policies to two weeks compared to Cisco’s 45 days, and “have even cancelled some orders and told customers to reorder.”

Cisco CEO Chuck Robbins took to his company’s Q2 2026 earnings call this past Wednesday to address the significant increases in memory prices across the market.

“Leveraging our industry-leading supply chain team, we are proactively implementing three key strategies. First, we have already announced price increases and will continue to monitor market trends and make additional adjustments as necessary. Second, we are revising contractual terms with channel partners and customers to address evolving component prices. Third, Cisco’s operating scale and industry leading position help us negotiate favorable terms and secure supply to fulfill current and future demand. Overall, we feel confident in our ability to manage this industry wide dynamic better than our peers.”

The CEO added that the recent price hikes aren’t changing buying habits so far. As networking appliances require less memory than servers, “the price increases are more nominal,” Robbins said.

Cisco CFO Mark Patterson also weighed in on memory price increases during the tech giant’s earnings call, saying that Cisco would “control what we can control.”

“We’re going to stay very close to [memory price hikes] and adjust as needed going forward. Secondly, there’s some T’s and C’s with partners and customers that we’re going to adjust to really bolster our position there. Thirdly, it’s really leaning into our financial strength and our world class supply chain. If you look at it, it’s evidenced by our advanced purchase commitments that just in the last 90 days, are up 1.8 billion. If you look at it on a year-over-year basis, are up about 73 percent — a big chunk of that is around memory,” he said.