Dive Brief:
- Hewlett Packard Enterprise reacted to ongoing chip shortages by raising storage and server product prices multiple times in November, December and January, according to the company’s President and CEO, Antonio Neri. The server and networking vendor expects the component crunch to constrain the supply of random access memory and NAND flash memory through 2027, he said during a Q1 2026 earnings call Monday.
- In addition to upping surcharges on impacted products, HPE is repricing existing quotes, extending agreements with silicon and memory component providers, and providing channel partners with cost-transparency alternative configuration recommendations as part of a three-pronged mitigation strategy, said Neri.
- As customers seek cost-saving options, the vendor is meeting them halfway through its HPE Financial Services division. “During these high commodity cost cycles, HPE FS is a strategic advantage enabling customers to maximize the value of their current IT infrastructure and provide access to certified preowned technology,” Neri said, adding the unit “delivered an exceptional quarter with record returns on equity.”
Dive Insight:
An industry-wide component crunch hasn’t just increased prices — it’s also raised the profile and appeal of IT asset disposition programs that use refurbished hardware to replace new purchases.
Major channel-focused vendors, including Cisco, Dell, HP and Lenovo, are pushing certified pre-owned products to fill in supply gaps and bridge the temporary price surges, according to Omdia, a Channel Dive sister publication. The crisis, triggered by two-plus years of hyperscaler AI data center buildouts, creates an opportunity for OEMs with established internal and channel-based ITAD pipelines, Omdia Senior Analyst Ben Caddy told Channel Dive.
The situation hasn’t affected HPE’s bottom line yet, Neri reassured investors. Server and storage demand remained strong, driven by AI projects and deployment. The company saw “zero impact on demand” during the quarter, he stressed.
HPE’s revenue grew 18% year over year to $9.3 billion in Q1. The company’s networking division more than doubled its revenues, which increased 151.5% from the prior year, fueled in large part by HPE’s 2025 acquisition of Juniper Networks for $14 billion.
The first Juniper Networks integration phase is now complete, Neri said. Phase two will focus on a combined go-to-market strategy.
“As we move to our second phase, we are focused on building a new networking market leader by aggressively executing our strategic product and software road map while driving revenue synergies through our go-to-market scale,” said Neri.
The company is targeting the telecom business with the rollout earlier this month of high-density, AI-capable Juniper PTX routers, despite selling its Telco Services division to HCLTech in December.
“We are, of course, favoring the high-margin businesses,” Neri said. “Networking uses less memory but is a critical component of our demand shaping.”
Neri cautioned that HPE has seen signs of bottlenecks in the CPU pipeline, which could trigger further increases in component costs. “I’m significantly less concerned about the CPU,” he said. “But if you have the CPU and you don’t have the memory, you’re kind of stuck in the middle, right?”
