Understanding the Network Equipment Supply Chain Crisis
The current shortage of microchips for network equipment is creating major challenges for businesses. The supply chain behind these devices is complex and fragile. In many cases, a single component can cross more than 70 international borders and travel over 31,000 miles before reaching its final destination. Manufacturing and processing often take place in Texas, Michigan, Malaysia, Germany, and China before products arrive at ports in California for distribution.
Travel restrictions and staffing shortages caused by the COVID-19 pandemic disrupted what was already a just in time supply chain. As a result, delays have grown worse instead of improving. Today, networking equipment lead times can reach up to 400 days. Inflation has also driven up prices, while missed shipping dates have become common. These issues raise a critical question for many organizations. How can your company keep its network running with so much uncertainty?
Long Lead Times Are Here for Now
In a Gartner report titled “What Are My Options for Dealing With Long Lead Times on Network Equipment?”, analysts noted that lead times were expected to remain high through early 2023, followed by slow and gradual improvement over several months. This outlook has forced companies to rethink how they source, deploy, and manage their network hardware.
The report outlined five strategies that organizations can use to maintain network capability during extended shortages. Only one option focuses on adding more physical hardware, while others rely on smarter use of existing resources or alternative approaches.
Option 1: Optimize Existing Network Hardware
Many organizations are not using all the capacity they already own. Gartner estimates that many switches operate at less than 75% of their available ports. In campus and enterprise environments, unused ports are often left open to support future growth or simplify cabling.
The report found that at least 25% of campus and data center ports are unused, and in some cases, the unused percentage is even higher. By consolidating connections and reducing excess capacity, companies can often free up 10% to 15% of their existing switches while still leaving room for growth.
This approach does require planning. Network changes, temporary downtime, and labor may be needed. While it may limit short term expansion, it can help organizations get through the worst of the shortages.
Option 2: Shift Workloads to the Cloud
Moving network workloads to the cloud can reduce the need for new on site hardware. When organizations rely on hosting providers or public cloud platforms, the provider supplies the network equipment. Because this hardware is shared across many customers, overall chip demand is lower.
This strategy allows businesses to avoid purchasing new data center switches and similar devices. Gartner also recommends using x86 servers instead of specialized network appliances that have limited interface counts, such as routers, firewalls, and load balancers. For many companies, the cloud offers faster access to capacity during supply chain disruptions.
Option 3: Gain Priority With Vendors
Hardware vendors are not always following a first in, first out order process. Instead, they often prioritize customers who represent larger revenue opportunities or pose a risk of lost business.
Organizations can improve their position by clearly communicating their long term value as a customer. In some cases, letting a vendor know that you may take your business elsewhere can move your order higher in the queue. New customers should also highlight their potential for future growth. This approach does not guarantee success, but it can reduce wait times.
Option 4: Use Certified Refurbished Equipment
Not all usable hardware is brand new. Many devices that are replaced early or lightly used are refurbished and resold. Certified refurbished equipment often includes a warranty and can come from major brands such as Cisco and HPE Aruba.
While the equipment may not be the latest model, lead times are usually much shorter. Instead of waiting months or more than a year, businesses can often receive refurbished hardware in days or weeks. This option can provide a reliable bridge until new equipment becomes available.
Option 5: Extend the Life of Existing Equipment
Many organizations replace network hardware well before it reaches the end of its usable life. A switch that is nearing the end of its warranty does not stop working overnight.
Instead of automatically retiring equipment, companies can negotiate extended service contracts with vendors. This allows organizations to continue using reliable assets while delaying major purchases. Extending the life of existing hardware can reduce immediate pressure on budgets and supply chains.
Finding the Right Path Forward
Network equipment shortages are likely to remain a challenge for many organizations. By optimizing current hardware, considering the cloud, working strategically with vendors, exploring refurbished options, and extending the life of existing equipment, businesses can maintain stability during uncertain times. These five approaches offer practical alternatives that many companies have not fully explored.