U.S. AI once again faces power equipment bottlenecks: Nearly half of data centers are hindered this year, developers are eyeing second-hand transformers

A boom in U.S. data center construction has run into a bottleneck—its throat is being “stuck” by power equipment.

According to media reports earlier this month, nearly half of the data center projects planned for the U.S. this year will face delays or cancellations; one of the key reasons is shortages of power equipment such as transformers, power supplies, and batteries.

Because domestic production capacity in the U.S. cannot meet demand, data center developers have no choice but to rely on imports. Wood Mackenzie senior analyst Benjamin Boucher said, “Domestic capacity is far from enough, so companies basically have to turn to the import market to buy.”

In the AI data center construction boom, funding is not the problem. Just in the past year alone, Alphabet, Amazon, Meta, and Microsoft have all planned to pour more than $650 billion into it. The plans described by tech giants are quite ambitious in terms of their data center buildout targets, but the number of projects actually under construction remains limited.

Data from climate intelligence firm Sightline Climate shows that in 2026, the U.S. has about 12 gigawatts of data center projects planned to come online, but currently only about one-third are in the construction phase.

Figure | U.S. data center construction status—orange indicates announced planned buildout capacity, black indicates actual under-construction capacity (Source: Bloomberg)

AI data center construction also follows the “barrel law.” For U.S. data centers, even though the cost of power equipment accounts for less than 10% of total data center costs, right now it is that “shortest plank.”

Andrew Rackens, head of energy and infrastructure at data center developer Crusoe, said, “As long as there is one delay in a single link in the supply chain, the entire project cannot be delivered. The current situation is like a very complex jigsaw puzzle.” The company took on the “Stargate” project in the Abriline Park area of Texas, and the reason it won the contract is that Crusoe placed orders for and locked in part of the power equipment supply in advance, promising that some data centers could be powered on within less than a year after construction starts.

As the scale of AI data centers expands rapidly, demand for high-power transformers is also rising.

Before 2020, these types of high-power transformers typically required 24 to 30 months for delivery. Philip Pyrone, CEO of GE Vernova’s electrification division, said that in the past—when data center scale was smaller and time requirements were not as stringent—this cycle was “entirely acceptable”; but now AI companies usually want to “receive equipment within 18 months.”

However, today delivery lead times have stretched to as long as five years, and prices keep climbing. As a result, some companies like Crusoe are even targeting shuttered power plants and refurbishing their old transformers.

For decades, the U.S. has outsourced manufacturing to other countries. The series of “reshoring/manufacturing back-to-home” policies rolled out over the past decade has not significantly boosted domestic production capacity, so even during the AI boom, U.S. companies still need to rely on imports—most transformers in the U.S. come from Canada, Mexico, and South Korea. In addition, Wood Mackenzie estimates that in the first 10 months of 2025, the U.S. imported more than 8,000 high-power transformers from China, while the total number in all of 2022 was fewer than 1,500.

Data recently released by China’s General Administration of Customs shows that the cumulative export value of power equipment in January to February reached 16.106 billion yuan, up 33.69% year over year. Looking at specific products, the high level of exports for transformers has continued, maintaining high growth year over year; exports of electricity meters rebounded on a month-over-month and year-over-year basis, with export value hitting a recent high; switch exports declined month over month but remained at a relatively high growth rate year over year; and cable exports achieved high year-over-year growth.

Goldman Sachs also noted in a research report released earlier that in January to February this year, China’s exports of high-power transformers (>10 MVA) totaled 4.4 billion yuan, up 61% year over year. Among them, the increase in exports to the U.S. was especially pronounced, with a year-over-year surge of 182%; at the same time, the average export unit price of transformers from China to the U.S. overall is trending upward, with the average price in January to February rising 6% year over year.

(Source: Jiemian Finance)