The ongoing memory price surge and supply shortage are increasingly disrupting the networking industry's shipment schedules. Multiple network equipment manufacturers expect this supply-demand imbalance to persist with no short-term resolution, potentially extending its impact into the second half of 2027 or even 2028.
Senao Networks chairman Tommy Tsai acknowledged that the memory shortage will heavily affect operations in the first half of 2026, especially the first quarter. He estimates a 20–30% gap between orders received and actual shipments during the first half of 2026, which marks the year's biggest operational uncertainty.
Supply chain pressures intensify
The supply chain squeeze is severe. Tsai revealed that current major suppliers can only fulfill about 70% of Senao Networks' 2025 demand, forcing the company to source the remaining 30% from spot markets. Due to chaotic spot pricing and memory giants prioritizing cloud service providers (CSPs), networking firms face not only relationship-based allocation but also fluctuating prices.
Tsai noted that overall order volume in 2026 looks better than 2025; however, many customers are postponing deliveries amid rising memory costs. Customers typically hold three to four months of inventory, enough to cover through the first quarter of 2026, so they remain cautious about accepting higher prices, hoping for eventual cost reductions.
He further analyzed that once inventories deplete around May or June 2026, customers will have to resume purchasing despite high memory prices to maintain operations. This dynamic should clarify bargaining power by the second half of 2026 and help restore shipment momentum.
Telecom orders face unique pressures
However, not all networking clients can delay shipments. Suppliers serving telecom operators stressed that telecom orders "cannot be postponed." Since telecom revenue mainly comes from monthly fees rather than one-time equipment sales, delaying installations risks losing customers to competitors, which would be counterproductive.
Moreover, telecom networking products require lengthy certification processes, making material changes during mass production unfeasible for cost savings. Therefore, despite soaring memory prices, telecom operators prefer absorbing costs to keep delivery schedules on track, passing expenses onto user subscription fees.
With AI-driven memory capacity fully constrained and supply-demand imbalances persisting, networking vendors face significant profit erosion from rising costs—even amid strong order intake—making it the largest variable for 2026 performance.
Article translated by Jingyue Hsiao and edited by Jerry Chen
