While U.S. hyperscale revenue grew 11% year over year, the supply chain for data center equipment used by hyperscalers had a rocky quarter, according to a report. The supply chain for hyperscale data center equipment was disrupted by shifting lead times and trade war headwinds, according to a report by 650 Group.
650 Group expects supply chain constraints will continue in the third quarter due to Covid-19 and trade war issues.
“U.S. trade war activities, mainly against Huawei, caused significant lead time increases in many critical components for cloud data center build-outs during the quarter as the 5G battle against China is having ripple effects into the cloud supply chain," said Alan Weckel, founding analyst for 650 Group, in a statement.
Hyperscalers are poised to ramp up next-generation server and networking architectures over the next two years, according to the report. On the networking side, Weckel said in an email to FiercTelecom that the next generation architectures included 400G and 800G deployments while the server side would be driven by 112G SERDES-based NICs and switches.
In the first half of this year, U.S. hyperscalers' revenue was nearly 10 times that of their Chinese counterparts. U.S. hyperscalers, which include Apple, Facebook, Google, Amazon, and Microsoft, are having an increased influence on the supply chain, according to 650 Group.
650 Group also noted that four of the five largest hyperscaler companies are currently under U.S. government scrutiny for alleged monopolistic behavior. Last month, the CEOs of Facebook, Apple, Amazon and Google virtually testified before Congress during an antitrust hearing. Market capitalization is averaging more than $1 trillion for the top-five U.S. hyperscalers.
650 Group's report said infrastructure-as-a-service (IaaS) revenue was robust in Q2, due to surge capacity efforts in IaaS companies' infrastructure instead of their own build-outs. Weckel said second quarter IaaS cloud revenue hit a record, exceeding the previous revenue record that was set in the fourth quarter of last year, and over twice the revenue from three years ago.
Search and social revenue growth was hamstrung in the second quarter due to the changing viewing habits of consumers during the coronavirus pandemic.