Dell Technologies Inc. (NYSE:DELL) CEO Michael Dell warned that semiconductor shortages could worsen in 2027, suggesting memory supply constraints could persist for four years as AI demand outpaces manufacturing capacity.
“I do think it gets worse next year in terms of demand and supply,” Dell told CNBC’s David Faber on Tuesday.
When Faber asked specifically about memory, Dell added: “Maybe it’s a four-year problem because there’s just not enough supply.”
Why the Shortage Could Last Until 2030
Chipmakers are racing to catch up with demand they never saw coming. New factories take about four years to build, Dell said, meaning plants planned today may not begin production until 2029 or 2030.
But demand isn’t standing still. The first wave came from companies developing powerful AI models. Now Dell sees another emerging as businesses begin adopting the technology.
“Now we’re starting to see this wave in the enterprise. But it’s really just beginning,” Dell said.
ASML Holding NV (NASDAQ:ASML) said Wednesday its planned chipmaking-equipment supply would fall short of customer demand in 2027 and 2028. Some customers have expressed interest in placing orders for 2029 and 2030.
Semiconductor veteran Steve Williams told Benzinga last week that Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) was effectively sold out of advanced manufacturing capacity for 2026, despite plans to spend up to $64 billion this year.
Williams identified advanced packaging, which combines AI processors with high-bandwidth memory, as another bottleneck.
Dell’s $95 Billion Backlog Meets Wall Street Doubts
Dell designs and deploys complete AI servers and data-center systems, combining Nvidia Corp. (NASDAQ:NVDA) processors with memory, networking and cooling equipment.
The company reported $16.4 billion in quarterly AI server revenue and a record $95 billion backlog in September.
But scarce components can raise costs and delay deliveries, even as demand surges.
Barclays analyst Tim Long downgraded Dell from Overweight to Equal-Weight Wednesday, cutting his price target from $603 to $574. Dell shares fell around 8% in morning trading.
Long sees no meaningful acceleration yet in businesses purchasing their own AI infrastructure, contrasting with Dell’s confidence that enterprise adoption is just beginning.
The analyst still forecasts Dell’s AI server revenue tripling to $75 billion this fiscal year, but expects growth to slow over the following two years.
Despite those concerns, traders on Polymarket priced only a 6% chance of a qualifying AI industry downturn by December 31. The contract requires three severe events within 90 days, rather than merely slower investment.
Long estimates Dell’s AI server operating margins at around 5%, leaving the company with limited room to absorb higher component costs.
Image: Shutterstock