Supermicro Seeks Forecasts From Partners To Navigate Chip Shortage

A Supermicro executive tells CRN that the server vendor needs extended forecasts from channel partners to navigate the global chip shortage. ‘We do need to give some kind of guidance to Intel, AMD and Nvidia, whenever and however we can, for us to ensure that we get the proper allocation and delivery from them,’ he says.

Supermicro is asking channel partners for extended forecasts on orders to help the server vendor navigate the global chip shortage that is having a broad impact on the IT industry and beyond.

“The forecast mechanism always has been there, but it needs to be more tight now, mainly because of the longer lead times and how do we ensure that they are not going to be caught off-guard halfway through a project,” said Vik Malyala, senior vice president of field application engineering at Supermicro, in a recent interview with CRN.

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Supermicro is in the midst of major server refreshes with the recent launches of Intel’s third-generation Xeon Scalable CPUs, AMD’s third-generation EPYC CPUs and new data center GPUs from Nvidia — an unprecedented level of activity that is being exacerbated by widespread shortages that are impacting those chips and other kinds of components.

“There is no confusion or no doubt in anyone’s mind that the supply chain is going to be tricky — unless we are totally from a different planet,” Malyala said. “What we are looking at is one on the CPU side. And the second is on the rest of the components: the memory, the drives, even things like fans.”

While Supermicro has the supply to get started with servers using new chips from Intel, AMD and Nvidia, according to Malyala, the chipmakers has given the server vendor “clear guidance that we need to be giving them clear forecasts and lots of advanced notice to have them supply without any hiccups.”

Malyala said Supermicro’s need for better forecasting from channel partners is meant to “help them and help us manage this crisis better.” He added that the extended forecasts will not serve as binding contracts and will only serve as a guide to improve Supermicro’s planning with suppliers.

“Going past even two quarters will actually help because we do need to give some kind of guidance to Intel, AMD and Nvidia, whenever and however we can, for us to ensure that we get the proper allocation and delivery from them,” Malyala said.

While there are supply constraints for CPUs and GPUs, the lead times for some non-CPU components, like network controllers and storage controllers, are extraordinarily long, going as far as 40-50 weeks if orders go above a typical forecast, according to Malyala.

“If you take a look at a motherboard design and there are different components, some of [the component suppliers] are asking us, ‘if you have an optic component in your requirements and now you need 50 percent more,’ they are saying, ‘your 50 percent more will take 50 weeks,’ for example,” he said. “Luckily, we have agreements with the key vendors to support us under certain limitations, which helps us to manage it better.”

Alexey Stolyar, CTO of International Computer Concepts, a Northbrook, Ill.-based system integrator, told CRN that the widespread chip shortages are probably the worst he’s ever seen and they’re starting to impact the company’s sales. He’s seen a variety of causes, from substrate shortages and shipping slowdowns to cryptocurrency mining, which has spiked the demand for GPUs.

Stolyar added that he has noticed one popular Supermicro product among his customers go from a regular lead time of 3-4 weeks to more than 16 weeks. While he doesn’t know the exact cause of the delays, he suspects it may be related to the broader component shortages.

“There’s just shortages across the whole industry,” he said.

Stolyar said it’s easy for his company to provide Supermicro forecasts for customer projects that have a predictable cadence. The challenge is with the ad-hoc projects from customers that can’t be forecasted in advance, which is exacerbated by the fact that some can be high-volume orders, he added.

“The normal ones are easy to forecast. These ones that just randomly come up are much harder to forecast,” he said.

One workaround, according to Stolyar, is to look at historically popular product SKUs among his company’s customers and provide forecasts based on that. Otherwise, his company’s salespeople try to get customers to give as much advanced notice as possible or even lock in purchase orders if possible.

“The more information we have, the easier it is to make sure we’re meeting lead times and expectations,” he said.

An executive at another system integrator, who asked to not be identified, said he has also seen “shortage problems in every direction,” but his company has been working closely with Supermicro on forecasts, which he believes has helped shorten lead times.

“Their extensions are probably less than what we’re seeing from some of the other vendors,” he said, adding that one vendor has given leads times of roughly 13 weeks for servers.