AI-Driven Memory Shortage - Impact to Supply and Pricing of Personal Computers

The Office of Government Procurement (OGP) is aware of ongoing market disruption affecting the availability and supply of Windows Desktop and Notebook Personal Computers. This disruption is being driven by global supply chain pressures as the production of memory and storage components, including DDRAM and SSD, is diverted to support the development of AI “gigafactories”.

While the exact level of impact and any possible mitigation strategies are yet to be fully understood, the outlook from the industry and from industry analysts suggests that this disruption may be experienced for a period of up to two years with possible impacts to pricing and availability of manufactured personal computers.

It is clear, however, that this issue will directly impact all Enterprise class OEMs, including HP, Dell and Lenovo and, consequently, will have an impact on the OGP Framework for Desktop, Notebook and 2-in-1 Notebook computers. The OGP is actively engaging at Framework level with Framework Members and relevant stakeholders to seek clarity on supply outlooks, pricing implications and available mitigation options. We will continue to keep clients informed as information becomes available.

It is important to note, however, that while OGP will manage and communicate this issue at Framework level, each Public Service Body (PSB) remains solely responsible for the management of its own individual contracts, including matters relating to delivery, pricing, performance and any contractual remedies.

Accordingly, PSBs are strongly advised to:

• Familiarise themselves with the terms and conditions of their own contracts, including provisions relating to termination (including termination for convenience), Force Majeure, variation of product and services and supply disruption;
• Actively manage supplier engagement and delivery requirements within their own organisations; and
• In the event that a termination notice is received from a supplier, or where there is a material risk of supply disruption, consider seeking independent legal advice appropriate to their circumstances.

PSBs are also advised to familiarise themselves with alternative sources of supply, such as the OGP Framework for Remanufactured Laptops (details available OGP).

OGP will continue to support PSBs by:

• Engaging with suppliers at Framework level to gain a detailed understanding of impacts to supply and price and any possible mitigations;
• Providing timely updates and relevant market intelligence to PSBs as it becomes available; and
• Supporting PSBs from a process and market engagement perspective where they choose or need to return to market.

PSBs who have existing contracts for Desktop or Notebook Computers or Data Centre Equipment under OGP central arrangements can contact the OGP if they have any queries in this regard.

Further information will be provided on the OGP website as it becomes available.