The race to build next-generation data centers is faltering under mounting strain and not just from land shortages or regulation. The industry's biggest obstacle may be the missing parts that keep these massive, power-hungry facilities running.
Almost half of the data centers planned for 2026 are likely to be delayed or canceled because much of the specialized electrical equipment needed to build them comes from China, reports Bloomberg. Data centers are giant electrical devices that turn power into computation. They require transformers, switchgear such as circuit breakers and fuses, batteries and cables — equipment essential not only for powering servers but for reinforcing the grids that sustain them.
Someone has to build those parts somewhere. It's been a long time since the United States was a force in such basic manufacturing — one of the reasons the Trump administration once pushed tariffs to revive domestic capacity. Yet federal data shows only a gradual rebound.
Federal Reserve figures on electrical equipment manufacturing reveal a 16% increase from May 2009 to April 2020, followed by a sharper 60% rise through February 2026. Even so, Fortune Business Insights estimates Asia Pacific contributes 39.40% to global electrical equipment revenue, compared with 28.20% from North America and 22.90% from Europe.
"There's not enough domestic capacity to go around, so people are pretty much forced to go to the export market," Benjamin Boucher, senior analyst with Wood Mackenzie, told Bloomberg.
China remains the dominant supplier — and a prime target of U.S. tariffs — driving up costs and complicating access just as demand surges. Electrical infrastructure equipment may represent less than 10% of a data center's total cost, but without it, projects cannot move forward. Before 2020, high‑power transformers typically took 24 to 30 months to deliver after an order; now, amid the AI‑driven construction wave, developers want them in under 18 months — a timeline manufacturers can't meet.
"If we're too indiscriminate in our effort to diminish our reliance on China to zero, that could come at excessive cost to American companies," Joshua Busby, a professor of public affairs at the University of Texas at Austin, told Bloomberg.
The equipment shortfall compounds other challenges facing developers — from skyrocketing land and water costs to restrictive state regulations. In California, strict permitting has slowed projects, while in Maine, lawmakers are considering an outright ban on data centers, according to the Bangor Daily News. Meanwhile, the well‑known shortage of skilled construction labor has pushed BlackRock to pledge $100 million for workforce training.
Together, these obstacles threaten to disrupt the financial models that underpin data center development, delaying timelines, raising costs and reshaping expectations across one of the fastest‑growing sectors of the digital economy.
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