As AI chip demand continues to surge in India and globally, supply constraints are evolving from chip availability to critical component shortages, threatening to impact the broader hardware ecosystem through 2027, according to Nomura.
- AI chip demand remains robust due to hyperscalers' data center expansion.
- Critical component shortages expected to worsen through 2027.
- Broader supply chain price rises could affect multiple industries.
What happened
According to a Nomura report, the AI investment cycle is not slowing down, driven by continued heavy spending on AI data centers by major hyperscalers including Microsoft, Google, Amazon, and Meta. While AI chip demand remains strong, the focus has shifted to shortages of essential components across the semiconductor supply chain.
Nomura identifies escalating scarcities in key parts like printed circuit boards, integrated circuit substrates, high-end capacitors, power management ICs, and optical components. These constraints are predicted to intensify throughout the second half of 2026 and into 2027, causing an unprecedented supply mismatch period that complicates hardware production for AI infrastructure.
Why it matters
These emerging shortages could disrupt not only AI hardware manufacturing but also spill over to non-AI sectors such as consumer electronics and automotive industries, potentially leading to continued or increased price hikes along the supply chain. This has broad implications for companies relying on chip-based components beyond the high-profile AI market.
Despite these challenges, Nomura insists that the AI infrastructure investment cycle has not peaked. The brokerage points to strong capital expenditure plans from hyperscalers and a steady pipeline of new data centre builds worldwide, underpinning sustained demand for AI-related hardware over the medium term.
What to watch next
Nomura’s updated forecasts anticipate global server market revenue growth of 74% year-over-year in 2026 and a further 65% increase in 2027, primarily fueled by AI deployments and general CPU server sales. Monitoring how component shortages develop will be critical to understanding potential risks to this growth trajectory.
Industry participants should watch for price inflation trends among suppliers of PCBs, capacitors, and power management components, as well as the global distribution of data center projects. These factors will influence when and how the supply chain bottlenecks might ease or worsen, setting the rhythm for AI infrastructure expansion in India and worldwide.