Dell shaves months off lead times for GPU-powered AI servers

TSMC turns advanced packaging production knob to 11

Dell lead times for computers with GPUs like Nvidia's H100 have come down to eight to 12 weeks, a significant reduction from nearly 40 weeks late last year.

Dell Taiwan's Terence Liao said that while AI-fueled demand for GPUs remains high in Taiwan (and elsewhere, it seems), the company has finally been able to reduce delivery times, per a report from United Daily News. In late 2023, Dell estimated a lead time of 39 weeks for shipments of servers powered by Nvidia's H100 GPUs.

Liao said that since February, GPU supply has improved and thus brought shipment times down substantially. This was thanks to increased production for TSMC's chip-on-wafer-on-substrate (CoWoS) packaging service, a key bottleneck in the creation of datacenter GPUs like the H100. Last September, demand was so high for the advanced packaging technology that TSMC said it could only meet 80 percent of orders.

According to an earlier report in November from United Daily News, TSMC set out to expand its CoWoS production capacity by 20 percent. Given that TSMC estimated that the CoWoS shortage would last for 18 months in September, this 20 percent boost probably hasn't fully met demand, but has still likely mitigated supply constraints. The recent earthquake in Taiwan hasn't affected supply from TSMC's CoWoS fabs.

The situation also seems to be improving for Dell rival HPE, which quoted a 20 week or so lead time last month. For comparison, in November market analysis firm Omdia said lead times for the whole server industry ranged from 36 weeks to a whole year. Even if HPE was sitting at a relatively low lead time of 36 weeks, a decrease to 20 weeks is a big deal.

However, HPE's business did suffer due to missing out on all those potential GPU sales, and says its order backlog is now worth $3 billion. That's not a terrible problem to have, all things considered.

In the long term, the advanced packaging shortage should be alleviated by the construction of new packaging facilities. TSMC plans to start construction for a new CoWoS plant in northern Taiwan in the second half of 2024, with a completion date set for Q3 of 2027. Additionally, packaging services from Samsung and Intel could boost production even further, taking potential business away from TSMC if it can't expand its CoWoS production capability fast enough. ®

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