Scaling Servers Report

The size of the U.S. server market is rapidly increasing, driving growth in U.S. server production and imports. This report assesses the current state of server supply to the U.S. market, including recent trends in production and imports, and U.S. server exports. It is part of a project on the U.S. information technology infrastructure equipment supply chain.

Key Findings:

1. The growth of cloud computing, e-commerce, video streaming, artificial intelligence (AI), and edge computing is driving investment in the United States in IT infrastructure like data centers.
2. The availability and cost competitiveness of servers and networking equipment to support this growth will be critical.
3. U.S. demand for servers, in particular, substantially increased over the last decade and is projected to keep rising at a rate faster than overall GDP.
4. U.S. producers are ramping up server production and many global server producers have announced new investments in U.S. manufacturing plants. These plants will take time to come online, however, as most are not scheduled to start production until 2026.
5. U.S. server imports also significantly increased in recent years. Mexico is the largest supplier of servers to the U.S. market, followed by Taiwan, which gained market share following imposition of Section 301 tariffs on China starting in 2018.
6. Servers account for about two-thirds of data center construction costs (according to a recent BofA analysis). With investments in new U.S. server plants not scheduled to come online until 2026, broadly applied tariffs, including against our largest suppliers, may result in significantly higher construction costs and delays for U.S. data centers.
7. Strategic trade policy can be an important tool to accelerate American AI investment when it is carefully targeted and timed.