Hardware Cost Pressures Return Across Tech Suppliers
NetApp, Gsi Technology and Ciena are again confronting tighter supply and higher component costs as AI-driven demand strains semiconductor and electro-optical markets.
Inflationary pressure and supply constraints are reappearing across three technology hardware companies, turning what had been an easing cost backdrop into a renewed margin and demand-management problem. NetApp (NTAP) said supply chain constraints had substantially improved during fiscal 2024 and lowered costs, then disclosed that inflationary pressures and supply chain constraints began hitting operations again in the second half of fiscal 2026.
The reversal is already changing NetApp’s pricing posture. The company experienced higher memory and other component costs beginning in the second half of fiscal 2026, pressuring gross margins, and expected those costs to stay elevated or keep rising near term. NetApp also said tight supply for specific products was expected to persist and could make it harder to meet customer demand, while price increases in the fourth quarter of fiscal 2026 may continue as the company tries to offset rising costs.
Gsi Technology (GSIT) shows how AI demand is pushing the pressure deeper into the semiconductor supply chain. The company said rapid growth in AI-related semiconductor demand was straining manufacturing capacity, with the risk of longer wafer fabrication and assembly lead times, allocation constraints at TSMC, and higher costs. Gsi also said worldwide inflation had lifted wafer and assembly service costs by about 25% since the beginning of fiscal 2021 while it remained dependent on TSMC for wafers and ASE for packaging without supply agreements.
That cost pressure has already been visible in Gsi’s manufacturing economics. Wafer fabrication costs rose 20% in fiscal 2022 and 6% in fiscal 2023 because of supply chain constraints, leading the company to increase product costs. Gsi expected inflationary pressure to increase wafer fabrication costs further, creating the risk that additional product price increases could push customers toward competitors.
Ciena (CIEN) adds the networking-equipment link in the same chain. The company said supply reliability had improved in prior periods, then disclosed in fiscal 2025 that AI and cloud spending had increased demand in electro-optical component and semiconductor markets, creating a constrained supply environment. Ciena said those constraints had resulted, and could further result, in shortages, longer lead times and higher costs that hurt revenue and gross margin, after previously using multi-sourcing and pre-ordering to blunt adverse supply conditions. The common signal is that AI demand is reviving hardware bottlenecks just as suppliers are again reaching for price and procurement levers.