Cable capacity emerges as bottleneck for AI data centres, Nexans says

By Mathias de Rozario

Oct ‌22 (Reuters) - Cable production ​capacity ​is emerging as a bottleneck for AI-driven data centre construction, Nexans' finance chief said, as demand rises faster than ‌the industry's ability to expand manufacturing capacity.

Global cable capacity ⁠is tight and building a new cross-linked polyethylene (XLPE) cable production line, known in the ‌industry as a CV line, ‌takes around three years, limiting how quickly suppliers can respond to demand, Nexans CFO Vincent Piquet told Reuters.

"Things can't move quickly ​and the people building these data centres are in a great hurry," Piquet said.

Data centres require large amounts of low- and medium-voltage ⁠cable to connect power infrastructure, with larger facilities consuming proportionately more medium-voltage cable.

The strain on ​power infrastructure is already delaying some projects. In September, Oracle issued a force majeure notice to a Blue ​Owl unit developing a large data centre ‌in New Mexico, citing potential difficulties securing sufficient power for the site.

Piquet said grid constraints, while slowing some ⁠projects, were also supporting demand for Nexans' products and allowing the company to be more selective when allocating capacity.

French distribution network operator Enedis has moved ⁠from annual procurement agreements to contracts lasting six or seven years in order ​to secure cable supply, he said.

While Europe generally faces fewer grid-connection challenges than the United States and benefits from stronger electricity networks in some northern countries, ‌Piquet said lengthy regulatory processes were delaying certain projects.

He said he did not expect demand linked to artificial ‌intelligence to slow, although Europe's data-centre expansion was likely to be less ⁠pronounced than in the United ‌States because private investment ​capacity was smaller and public funding played a larger role.

(Reporting by Mathias de Rozario in Gdansk; Editing by ‌Matt Scuffham)

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