Rising Hardware Costs: How Tariffs and Supply Chains Are Reshaping IT Spend

From server rooms to core networks, IT leaders are facing an unwelcome trend in 2025: rising infrastructure costs. Driven by newly expanded U.S. tariffs on Chinese semiconductors—some reaching up to 145%—the pricing ripple effect is now hitting procurement budgets across the country.

If you're planning hardware upgrades or building out data center capacity, it's time to rethink your approach. The cost landscape is shifting fast, and the decisions you make in Q2 could define your IT budget for years.

What's Getting More Expensive in the IT Industry?

According to data from recent industry reports (WSJ, VitalPBX), original equipment manufacturers (OEMs) are already adjusting their price lists. Here's a snapshot of the impact since Q4 2024:

• Rack Servers: +9%
  
• 25 GbE Switches: +12%
  
• Enterprise SSDs: +6%
  

These are not speculative forecasts—they’re real increases showing up on invoices today. And with additional tariff rounds expected by July 2025, prices may climb even further.

Why Is This Happening?

Several converging factors are driving this price surge:

1. Tariff Pressures

The U.S. government's expanded tariffs on Chinese-made semiconductors—some reaching 145%—are directly inflating component costs. Since many server and networking devices rely on Chinese chips, these expenses are passed downstream.

2. Supply Chain Realignment

Ongoing efforts to “de-risk” global supply chains have led to factory relocations, logistics bottlenecks, and temporary shortages, especially for advanced networking components.

3. OEM Cost-Passing

With tighter margins and complex global sourcing, hardware vendors are no longer absorbing cost increases. Instead, they’re embedding them directly into per-unit pricing.

How IT Leaders Can Respond

Fortunately, organizations have options. Here's how smart IT teams are responding to control costs without sacrificing infrastructure growth:

1. Forward-Buy Before the Next Tariff Tranche

The next wave of tariffs is expected in July 2025. For known hardware refreshes or expansions, consider advancing purchases to avoid inflated post-tariff pricing.

2. Explore Used or Refurbished Equipment

The secondary market is seeing a resurgence. Used and refurbished gear—certified by top vendors—is now averaging 30% less than new. It’s a solid option for lab environments, non-critical workloads, or even mainstream deployments with tight budgets.

3. Shift Toward Opex Models

Operational expenditure models, like leasing with buy-back guarantees, offer a way to avoid large capital outlays while maintaining up-to-date infrastructure. Many providers now offer flexible refresh cycles and return programs that protect your investment as the market shifts.

Rethink Your Bill of Materials (BOM)

Not sure if your BOM reflects today's best pricing strategies? You're not alone. Many IT departments continue using outdated quotes or spec sheets that don’t account for current market fluctuations.

Pro Tip: Have your BOM reviewed by a dedicated procurement specialist. A second opinion can uncover savings, suggest alternatives, or highlight risks before you commit to a multi-year investment.

Reshaping Your IT Spend

The days of stable IT hardware pricing are behind us—at least for now. As tariffs and supply-chain realignments continue to reshape the market, proactive procurement is no longer optional; it's essential.

MicroTech Systems, is one of the best IT consulting firms in Boise. We help IT leaders navigate this evolving hardware landscape with insight, flexibility, and strategy. Whether you're building a new environment or stretching your refresh cycle, we're here to help you make informed, cost-effective decisions.

Book a free consultation and let’s review your infrastructure plans together.