Dell reports substantial reduction in lead times for GPU-accelerated AI server configurations.

Dell has dramatically reduced lead times for computers equipped with advanced GPUs, bringing delivery windows down to eight to 12 weeks from nearly 40 weeks late last year. According to Dell Taiwan's Terence Liao, in late 2023 Dell estimated a lead time of 39 weeks for shipments of servers powered by Nvidia's H100 GPUs. The improvement has been driven by increased GPU supply since February, which Liao attributed to expanded production of TSMC's chip-on-wafer-on-substrate (CoWoS) packaging service—a critical bottleneck in datacenter GPU manufacturing. The CoWoS constraint was severe enough that in September, TSMC could only meet 80 percent of orders.

TSMC has taken steps to address the packaging shortage through capacity expansion. According to a November United Daily News report, the company set out to expand its CoWoS production capacity by 20 percent. Given that TSMC had estimated in September that the CoWoS shortage would last for 18 months, this expansion has likely helped mitigate supply constraints, though it may not have fully resolved demand. The recent earthquake in Taiwan has not affected supply from TSMC's CoWoS fabs.

Dell's rival HPE has also seen lead times improve, with the company quoting a 20-week lead time last month. For context, Omdia reported in November that lead times for the whole server industry ranged from 36 weeks to a whole year. Even HPE's relatively low 36-week baseline represents a substantial decrease to 20 weeks. However, HPE's business suffered from missing out on GPU sales opportunities during the shortage period, and the company now reports an order backlog worth $3 billion.

Long-term relief from the advanced packaging shortage should come through new facility construction. TSMC plans to start construction on a new CoWoS plant in northern Taiwan in the second half of 2024, with a completion date set for Q3 of 2027. Competition may also increase supply capacity: packaging services from Samsung and Intel could further boost production, potentially capturing market share from TSMC if it cannot expand its CoWoS production capability fast enough.