What is Behind the Ever-Growing NIC Lead Times?
AI hyperscalers are pushing through plans for more data centres and high-performance infrastructure, tightening the market for ultra-high speed networking hardware - especially network interface cards (NICs).
As one of the largest producers in the global NIC market, Nvidia hardware is facing huge lead times, with their ConnectX-6, ConnectX-7, and even the unreleased ConnectX-8 families being the hardest hit. Price hikes from Nvidia and Mellanox are expected in the near future, prompting companies to buy up stock now to prevent unnecessary spending later.
Buyers hoping to purchase ConnectX-7 cards can expect lead times of over 52 weeks as bulk orders from big AI companies significantly outpace production and keep large amounts of hardware from reaching the open market. The unreleased ConnectX-8 line is already facing a huge number of reservations ahead of release as top companies plan further developments in AI computing.
Another driver for this demand comes from outside the NIC market itself. It has been reported that China will allow a limited number of AI companies to purchase Nvidia H200 GPUs. New GPU clusters will of course require matching NICs, switches and transceivers to form a complete infrastructure stack. If approved, these companies will likely buy up large quantities of slightly older, more available NICs instead of waiting months for newer hardware, adding further pressure on the existing NIC market.
The Wider Industry
Under the same expanding infrastructure demand, lead times and pricing of switches and transceivers are also going up. Lead times for some switches have almost doubled, with most extending to at least 24 weeks. One of the main causes for transceiver shortages is the scarcity of digital signal processor (DSP) chips, pushing lead times for 800G and 1.6T modules well past 20 weeks.
RAID controllers are also essential hardware for high-performance computing as they manage multiple hard drives/SSDs as a single logic unit. They have seen some of the sharpest price increases of all hardware with some over 20% and lead times for multiple RAID controller parts now stretching past Q4 2027.
Actions for Procurement Teams
Demand from the AI and high-performance computing industry is far outpacing supply chains and shows no signs of slowing down anytime soon. With the market more competitive than ever, there are a few actions that procurement teams should consider:
- Ordering ahead of anticipated price hikes before they come into effect
- Finding reliable alternative parts, vendors, brands or compatibles now to avoid rushing substitutions during project implementation
- Find reliable distribution partners with independent stock and the ability to source outside of OEM allocation
Compatible parts from ATGBICS help companies mitigate these supply chain risks. We provide technology with equivalent quality and functionality to OEM original parts, guaranteed through strict adherence to industry standards, protocols and multi-source agreement (MSA) compliance. Because we source independently of OEM allocation through our trusted suppliers, we offer significantly shorter lead times and high-quality products at a fraction of the cost.
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