Russia may face a shortage of server hardware in the coming months
Business under protection
Russia in the next 3-6 months may face a shortage of server hardware. Forbes was told about this by a source in the system integrator and a source close to the manufacturer of server equipment, information about a possible shortage was also confirmed by Pavel Svarnik, a representative of the Lanit-Integration system integrator. According to a source in a system integrator, stocks of foreign components for servers should be seized from Russian distributors of IT equipment for three months of equipment production in Russia. Distributors OCS Distribution, Marvel Distribution and Merlion declined to comment. The interlocutor of the publication, close to one of the manufacturers of server equipment, says that if Russia continues to exist in a “blockade” mode, the shortage of servers will occur no earlier than in six months.
Server hardware is the basic infrastructure, in particular for business applications (accounting and other services that require the storage of large amounts of data), so all businesses will feel the shortage: banks, retailers, industrial enterprises and state-owned companies, the first interlocutor in the system integrator.
If there is a shortage, then it will hit absolutely all companies on a technological scale, since server equipment is responsible for storing, processing and transmitting data, according to Svetlana Appolonova, chairman of the board of the Association of Manufacturers of Electronic Equipment and Devices.
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A massive shortage of server hardware, most likely, without collection – initially, businesses used distributors’ stocks, and then Chinese hardware manufacturers will enter the market, who were not afraid of sanctions pressure: under US sanctions, Appolonova believes. However, at this time, Chinese equipment may not be technically compatible with likely IT systems already in place, and sourcing from one of the system integrators is also likely to be needed to address this issue.
A spokesman for Russian hardware maker Depo Computers declined to comment, citing “the uncertainty of computers on the market.” At server and storage makers, Yadro did not respond to Forbes’ substantive inquiry. Representatives of Russian companies developing components for servers Kraftway, ICL Techno, Aquarius, Baikal Electronics and MCST did not respond to Forbes requests.
After acceptance
The main reasons for the shortage in the server market are the shortage of foreign processors in Russia, as well as the refusal to produce domestically developed processors by Taiwanese TSMC, says Pavel Svarnik, director of the Lanit-Integration Development Deficit Center. TSMC is the largest chip and semiconductor manufacturer in the world, which on February 25 suspended work in Russia because of the “military special operation” * in Ukraine. At TSMC factories produced domestic manufacturers, in particular Baikal Electronics and MCST, have their own processors.
In November 2021, Baikal Electronics announced that intention test the assembly of their processors at the GS Group plant in the Kaliningrad region. The general director of Baikal, Andrey Evdokimov, raised that assembly in Russia would be cheaper than in Western factories.
Domestic servers are assembled in Russia, but all the main components (central processor, memory modules, hard drives) are imported, since they are not produced in Russia, says a second source in the system integrator. According to the statement, the resumption of supplies or their consolidation with local products will not work even in the medium term. The efficiency and productivity of domestic producers are not high, as noted by the Forbes interlocutor.
After the US and the EU countries issued a verdict against Russia, including export controls, large suppliers and server equipment suspended their activities – Dell, Hewlett Packard Enterprise, IBM and Cisco. According to the results of the IV quarter of 2021, the share of server distribution in Russia became Dell Technologies, followed by Hewlett Packard Enterprise and Russian Yadro. The volume of the Russian market of server equipment in the IV quarter 2021 grew by 4.1% in pieces and 28.8% in money in comparison with the same period of 2020 and reached 50,199 servers or $530.29 million, according to data IDC. The company did not disclose data for 2021, while in 2020 the market reached $1,319 billion.
In addition, in Russia there may be problems associated with existing diseases associated with exacerbation, Svarnik from Lanit-Integration. According to him, these are components that are often included in the composition – hard drives, active memory units or power supplies. Thus, the failure of the structure of hard drives may seem like a failure of the entire computing complex, he encounters.
Due to the solution of the most pressing problem on the market now – the benefits of already high value – telecommunications networks and data centers, the executive of the Association of Directors of Russian Companies and Electronics Manufacturers Ivan Pokrovsky. This can be achieved through the transition to independent chains of sets (through unauthorized vendorized samples in any country) and equipment components, as well as through import substitution. At the same time, the main risks are covered by the fact that a significant part of IT systems in Russia is actually controlled by foreign equipment manufacturers (for example, Dell or Hewlett Packard Enterprise), and if necessary, they can remotely control public equipment, Pokrovsky believes.
In the long term, both in state-owned companies and in business, their own digital transformation may be slowed down, which is based on the need for the equipment that is necessary for state-owned companies, and is not considered Pokrovsky.
One of the options for solving the shortage problem is the gray import of equipment and components from countries that have not joined the sanctions, says a third interlocutor in the system integrator. Many companies are already buying equipment in Kazakhstan, he specified. This message was confirmed by a fourth source in the system integrator: “Employees of Russian IT companies are already measuring the frequency of occurrence of equipment in Kazakhstan, Armenia and Serbia.”
competitive market
In 2021 in the server hardware market appeared a new player is a joint venture (JV) of Yandex, Lanita, Gigabyte and VTB. In May, the company announced the construction of a plant for the production of servers, data storage systems, smart components and other parts and invested more than 1 billion rubles in production. It is assumed that these Yandex servers can be used in data centers, as well as sold.
The first server at Yandex’s own plant is planned to be released before the end of 2022. In November 2021, Tigran Khudaverdyan, Managing Director of Yandex, listened to Forbes that the joint venture had the first batch of 200 servers under the Openyard brand in contract manufacturing. Then he noted that the reason for building his own plant is the possibility of selling devices to companies that are needed specifically for Russian servers, for example, state-owned companies. Even before the opening of the Yandex plant consequences production of its servers from China and Taiwan in Russia is partially allowed. A Yandex representative comments on a possible component for servers.
Produce your own core based on Intel processors and use Huawei technologies, as well as develop a T1 system integrator (formerly Technoserv), report in September 2021 RBC, citing sources. One of the interlocutors then said that the company is also considering the possibility of developing its own server from scratch, “but this option is to store time.” The company saw the prospects for the server market in Russia, because it is a growing market driven by import substitution, he explains. A spokesperson for T1 did not respond to Forbes’ request.
*According to the requirements of Roskomnadzor, when producing materials for use in production in Ukraine, all Russian media are required to use materials only from conventional sources of the Russian Federation. We cannot publish materials during which an operation called “attack”, “invasion”, or “declaration of war” is carried out, unless it is a direct quote (Article 53 of the Federal Law on the Media). In case of violation of the requirements, the media may be fined 5 million rubles, and the blocking of the publication may also be continued.