Dive Brief:
- Dell responded to industrywide memory chip shortages by raising prices and tightening discounts as revenues soared in the fourth quarter of its 2026 fiscal year, which ended Jan. 30, executives said during a Thursday earnings call.
- The hardware vendor increased server prices on Dec. 10 and acted across its Client Solutions Group portfolio less than a month later. “We had tens of thousands of open quotes in the PC business and changed them all on Jan. 6,” Dell COO and Vice Chairman Jeff Clarke said. “We're compressing discounting,” he added. “Our quotes are valid for the shortest period of time they've ever been.”
- Despite the chip crunch, Dell had a banner quarter. Revenues hit record levels for the quarter, increasing 39% year over year to $33.4 billion, and the fiscal year, which saw more modest 19% growth and hit $113.5 billion.
Dive Insight:
Dell joined a growing roster of technology vendors grappling with memory and storage chip price increases — and passing the costs on to customers and partners.
Component sourcing has tightened as cloud providers and model builders pour hundreds of billions of dollars into AI data center buildouts, consuming massive quantities of chips, processors and networking gear along the way.
“The global server and storage semiconductor and component market is entering a new phase of expansion driven by AI,” Baron Fung, senior research director at Dell’Oro Group, said in a Feb. 12 report. “Merchant GPUs and custom accelerators are at the center of this growth cycle, enabling a broad range of AI and domain-specific workloads.”
The research firm expects data center capital investments to surge to $1 trillion this year, straining the memory and storage supply chain.
HP took “targeted pricing actions” after seeing memory chip prices double during the three months ended Jan. 31, the PC and print vendor said during an earnings call earlier this week. Lenovo and Hewlett Packard Enterprise alerted their channels to similar moves, as did networking giant Cisco, which also began revising partner contracts.
“The entire supply chain has shifted to short-term contracts due to rising memory prices and uncertain availability for memory and CPU,” Rangit Atwal, senior director analyst at Gartner, told Channel Dive. “Consequently, vendors cannot guarantee pricing beyond a brief period.”
While Dell remained bullish on its prospects, projecting revenue growth of roughly 23% for the fiscal year, Gartner expects the PC industry to take a hit. The analyst firm estimates that dynamic random access memory and solid-state drive costs will increase 130% by the end of 2026, adding 17% to PC sticker prices, according to a report published Thursday.
“This is the steepest contraction in device shipments witnessed in over a decade,” Atwal said in the report.
Dell remained confident that customers would adjust to the situation.
“After the sticker shock, our customers began to understand the gravity of the situation,” Clarke said Thursday. “The conversations quickly turned to access to supply. The largest customers in the world, the most sophisticated customers in the world, began to move aggressively to protect their infrastructure build outs.”
The company saw a different dynamic in PCs, according to Clarke. Inflated inventory in the channel shielded buyers from the initial price bumps, he said, adding that there has been some “pull ahead” in orders.
“I don't know how to quantify that,” Clarke said. “What we do know is IT budgets are generally fixed at the beginning of the year.”
