Justin Hotard, Nokia’s CEO, states that data centre construction rates could double if memory chip availability and energy supply issues were addressed. Despite concerns over economic sustainability, demand remains strong even without upcoming advanced AI model releases.
- Data centre buildout could accelerate twofold if supply bottlenecks ease
- Memory shortages have driven DDR5 prices up 400% in Europe
- Sustained demand does not depend on imminent frontier AI model launches
Market signal
Nokia’s CEO Justin Hotard recently indicated that the current pace of data centre construction is constrained by shortages in memory chips and energy supply rather than lack of demand. He suggested the sector could build data centres twice as fast if these supply issues were resolved. This perspective highlights a strong underlying market demand for expanded infrastructure, despite some industry skepticism about whether revenue growth can keep pace with investment.
Supporting reports estimate the total planned investment could reach $10.3 trillion between 2025 and 2032, marking one of the most significant infrastructure expansions relative to GDP in modern history. However, doubts remain as to whether operational revenues from AI and cloud services will justify such large outlays. This dynamic puts pressure on component manufacturers and energy providers to scale alongside data centre operators.
Operator impact
Operators currently face rising costs due to supply constraints on key components such as DDR5 memory, which in parts of Europe has seen a price increase of over 400% in the past year. These memory costs can constitute up to half of the bill of materials for entry-level devices, complicating budgeting for data infrastructure projects. The limited energy availability also impacts feasibility and speed of new data centre deployments.
Nokia, which specializes in connects infrastructure—linking racks and entire data centre complexes—has seen strong sales growth reflecting broader buildouts. Their second quarter sales from data centre connections doubled to EUR 446 million. Operators should consider supply chain risks and energy sourcing strategies as they plan expansion to avoid delays or cost overruns.
What to watch next
Industry stakeholders should monitor memory supply trends and energy market developments closely, as these will be key determinants of data centre expansion capacity over the next several years. European initiatives such as multi-billion euro AI gigafactory projects may influence local supply chains and infrastructure readiness. Additionally, evolving financing models for data centre construction, moving toward joint ventures and special purpose vehicles, could affect project scale and timing.
Operators and buyers will also want to track advancements in deploying existing AI and cloud technologies, as Hotard notes substantial progress is achievable without waiting for the next wave of frontier AI models. This suggests near-term infrastructure investments remain valuable, with steady demand growth expected regardless of the timing of major new technology releases.