HPE boss: We're going to hike server and storage prices - shortages linger
"RAM and NAND now make up over half of the bill of materials cost of a traditional server, and the share will continue to rise as component costs increase"
Hewlett Packard Enterprise (HPE) says it is making “price adjustments across the entire portfolio” amid a “sharp acceleration in supply tightness.”
NAND and RAM shortages, volatile supply chains and rampant demand for hardware amid a global AI arms race have triggered a complicated climate for OEMs – and buyers are going to feel the sting of that, with higher costs.
The server and storage firm has “amended our quoting terms with a right to reprice existing orders for commodity cost increases between quoting and shipment,” CEO Antonio Neri told analysts on a Q1 2026 earnings call.
(HPE SVP of Channel Simon Ewington told partners last month that HPE is shortening “the quote validity windows to 14 days” from 30 days…)
Demand remains rampant and massively outstrips supply HPE said – driven by strong enterprise and sovereign demand for on-premises AI hardware.
“RAM and NAND now make up over half of the bill of materials cost of a traditional server, and the share will continue to rise as component costs increase. As a result, we expect higher average unit prices in both our server and storage products. Networking is more insulated, with memory comprising a significantly smaller portion of the bill of materials.” Neri.
Will that slam the brakes on demand?
Neri suggested not: “We don't have enough supply for all the demand we are seeing and the backlog we have… it's going to be interesting as we navigate the next few months. But… no one single customer told me, ‘I don't want the product because now it's too expensive or [a] higher price than I thought.’ All of them said, ‘okay, I understand the price increases.’
He added: “Some may take a lower-end configuration to get the product, but it was all about speed to get the product, not the price…”
HPE is focused on securing supply, expanding agreements with key silicon and memory partners, protecting its margin (by putting up prices) and “proactively communicating with customers and channel partners, providing lead time and cost visibility along with alternative configuration recommendations to shape demand,” Neri told analysts on a March 9 call.
For HPE itself, the outlook is positive: Q1 revenue was $9.3 billion, up 18%. EPS of $0.65 was a record high, Phase one of its Juniper integration is complete and it is on track to hit fiscal 2026 “ synergy” targets – indicated to be some $200 million, of a broader planned $600 million in savings.
HPE “entered Q2 with a record AI Systems backlog of $5 billion, primarily composed of enterprise and sovereign orders,” Neri told analysts, whilst its GreenLake cloud platform now has close to 50,000 customers.
