Dell confident of managing supply chain concerns

“There's just not enough capacity to meet all the global demand. I think we are gaining share and we'll continue to do our best to meet the demand and align with customers around their requirements,” said Michael Dell, Chairman and CEO of Dell Technologies.

As businesses continue to invest in AI, the concern some customers are having now is if they can access their infrastructure needed to run their AI workloads, given the increasing concerns on the global supply chain. The channel ecosystem itself is seeing increasing questions to vendors on their plans to deal with this.

Interestingly, with a global price increase on components for AI infrastructure, demand for the technology is not slowing down. In fact, IDC predicts that AI and Generative AI spending in Asia Pacific to reach $370 billion by 2029. IDC also predicts that by 2029, 75% of top Asia Pacific AI-driven enterprises will use advanced multi-tool architectures to dynamically and autonomously manage model routing across diverse models, orchestrating complex processes.

Richard McLaughlin, Preside of APJC at Dell Technologies also highlighted that one of the biggest asks and concerns from both customers and partners is on how Dell is managing its supply chain, especially with both increasing demand and prices of the components.

In an official statement addressing the topic, Dell Technologies stated that its supply chain is resilient and globally diverse. The tech company also stated that it's designed to maximize outcomes for customers and provides us with flexibility when navigating regulatory and trade dynamics.

“We’re managing this environment in real time, applying lessons from prior cycles and continuing to offer customers value. We’re differentiated by our scale, go-to-market model and long-standing supplier relationships. They provide advantages in periods of disruption.”

Working on what they can control

During the media conference at Dell Technologies World, Jeff Clarke, Vice Chairman and COO at Dell Technologies stated that the first and golden rule of Dell’s supply chain is providing secure supply to customers.

“Our job is to secure the supply that demand generates whether it is in the ISG (Infrastructure Solutions Group) or the CSG (Client Solutions Group) side of the business. So, scale matters as we often set our supply chain back to the differentiation we talked about earlier. It's about securing supply to allow us to grow and meet the needs of our customers. The economics of that is the cost is certainly not set by us. We try to work with our customers on how to soften them. But we have a rising inflationary cost market across all of us,” he said.

For Clarke, the focus for Dell is to focus on what they can control. This is why Dell tries to position customers and optimize how they build up.

“We need to make sure that we allocate supply for those customers line where they need the technology. We are telling our customers proactively to collaboratively plan with us. Tell us about your future demand as we are building partnerships in our multi years so we can understand that to protect them, so they have the technology they need,” he added.

For Michael Dell, Chairman and CEO of Dell Technologies, while there's more demand than there is supply, he believes that Dell has an incredibly robust supply chain.

“We manage through it. Our customers were able to create a construct to work with them where they're shared access to the supply that they know. They would like more too, but we're managing through it,” he said.

Interestingly, Dell also feels that the agentic movement is fueling demand globally.

“I guess it feels like the demand is still growing faster than the supply. I mean, one of the challenges is that it just takes a long time to build a significant factory, and you know, if this was DTW 3 years ago, we were talking about agents and all these things. The degree of progress has been just extraordinary. And so, the demand has just been growing quite a bit faster. I think if it had not been for this agentic movement, you probably would see some better demand supply equilibrium maybe in the second half of next year, but it feels to us like it's getting pushed out a bit from there,” Dell said.

Dell also pointed out that the company has decades of long relationships with critical suppliers and partners who have been very helpful.

“But you know, there's just not enough capacity to meet all the global demand. I think we are gaining share and we'll continue to do our best to meet the demand and align with customers around their requirements,” he said.