June 5, 2024 /SemiMedia/ -- Dell Chief Operating Officer Jeff Clarke said on a recent quarterly earnings call that they expect costs to rise in all forms, including shipping and component costs.

"Various signs indicate that insufficient capital expenditures, low factory utilization, and low wafer run rates will result in supply being lower than market demand," Clarke explained.

Dell believes that much of the market demand will revolve around powerful AI servers that require high-bandwidth memory and high-speed internal and external storage. The cost of SSDs and DRAM is expected to increase by 15% to 20% in the second half of this year. Dell is likely to adjust its prices accordingly and pass the pressure on to buyers.

Dell said several memory chip makers scaled back production in the second half of the year to help correct inventory problems, but the real problem now is too much demand and not enough supply.