Bullets:
Tech companies are investing billions of dollars in chips that cannot be turned on, because of a severe shortage of electrical equipment and power.
Over half of AI data center projects have been delayed or canceled, as supply chain bottlenecks result in years-long order backlogs.
Investment in AI data centers and chips are a major driver of US GDP growth, but the entire industry is reliant on Chinese electrical parts, which have doubled in price in just four years.
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Report:
Good morning.
A major driver of GDP growth in the American economy, is investment for data center construction. Insiders forecast spending on AI infrastructure to be $3 trillion over the next five years. Google, Amazon, Facebook, and Microsoft alone are investing $650 billion, just this year.
That is money that has been announced, and budgeted. But when we look under the hood, not much is really happening. Half of the data centers planned for 2026 will be delayed, or canceled outright. There are lots of challenges in this industry now. Data center construction isn’t popular, politically. And on the supply chain side, manufacturers can’t meet the demand for all the equipment that is necessary to build them. That’s especially true for electrical gear, and data center builders need a lot of imported equipment to get them built.
We shared earlier that Chinese gas turbine makers are winning orders from AI data centers in the United States, because of the severe order backlogs from other suppliers. Nvidia and others are making a lot of advanced chips that cannot be turned on. The United States doesn’t make electrical parts, so there is no choice but to import them.
The cost of electrical components of the data center are negligible compared to the costs of the total build, but obviously a data center doesn’t work at all if the machines can’t be plugged in.
These data go out for the next six years—data centers that are announced, and under construction. Even for 2026, less than half of the announced capacity for data centers is under construction now, and none of it is yet online. For 2027, over 2/3rds of the announced capacity has not yet begun.
This chart from TechSpot is even more stark. A third of the planned capacity from last year, 2025, has been delayed and is still offline:
A strong example of these bottlenecks can be seen in high-power electrical transformers. Even before 2020, the order backlog was over two years: a customer placed an order and took delivery in 24 to 30 months. Today it takes five years, and prices have doubled in that time. Data center contractors turned to China for that problem, and imports from China increased more than five times—from 1,5000 units in all of 2022, to over 8,000 for the first ten months of 2025.
The United States’ reliance on China for electrical parts is about the same today as it was before all the trade wars started, at around $50 billion a year, and it’s the same story for battery storage.
The tariffs don’t matter, the “alleged national security risk” doesn’t matter. When contractors are paid billions of dollars to build data centers for Amazon and Facebook, they’re looking for electric gear from whoever can make it. China has near-monopolies on the supply chains from end-to-end, and nobody thinks that will change anytime soon.
Be Good.
Resources and links:
Tom’s Hardware, China’s top chipmaker warns that rushed AI data center capacity could remain idle — SMIC chief says utilizing ballooning capacity ‘has not been fully thought through’
https://www.tomshardware.com/tech-industry/artificial-intelligence/chinas-top-chipmaker-warns-that-rushed-ai-data-center-capacity-could-remain-idle-smic-chief-says-utilizing-ballooning-capacity-has-not-been-fully-thought-through
Bloomberg, America’s AI Build-Out Hinges on Chinese Electrical Parts
https://www.bloomberg.com/news/features/2026-04-01/us-ai-data-center-expansion-relies-on-chinese-electrical-equipment-imports
Techspot, Nearly half of US data centers planned for 2026 are facing delays or cancellation
https://www.techspot.com/news/111947-nearly-half-us-data-centers-planned-2026-facing.html
Half of planned US data center builds have been delayed or canceled, growth limited by shortages of power infrastructure and parts from China — the AI build-out flips the breakers
https://www.tomshardware.com/tech-industry/artificial-intelligence/half-of-planned-us-data-center-builds-have-been-delayed-or-canceled-growth-limited-by-shortages-of-power-infrastructure-and-parts-from-china-the-ai-build-out-flips-the-breakers
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