Dive Brief:
- The technology distribution market in North America grew nearly 30% year over year to $28.9 billion, according to a Monday IDC report. Enterprise infrastructure, networking gear, semiconductors and other hardware components accounted for two-thirds of a $6.5 billion surge, the analyst firm found.
- While the $5 billion-plus software and personal computing segments remained the largest revenue generators for distributors, enterprise infrastructure increased 140% to $3 billion. Components and semiconductor distribution yielded $2.4 billion in revenues and network infrastructure reached almost $4 billion, fueled by high double-digit growth.
- “AI infrastructure is no longer just a hyperscaler story,” Brendan Rouse, IDC research analyst for partnering ecosystems, channels and alliances, said in the report. “Distributors are moving servers, storage and high-speed networking to ecosystem partners building AI capacity, and their ability to secure allocation and keep deals moving helped the channel set a new high.”
Dive Insight:
The hyperscaler gold rush triggered by generative AI four years ago largely bypassed channel partners, as cloud providers and model builders went direct to manufacturers for their hardware needs. While Big Tech’s AI capital investments continue to grow quarter by quarter, the enterprise market is gaining momentum.
Tech distributors saw server and storage drive up revenues more than 150% year over year in Q3, IDC said. Meanwhile, the enterprise market for semiconductors nearly doubled and ethernet switch sales grew almost 75%.
An ongoing chip shortage that surfaced late last year has continued to inflate memory, storage and other component prices, causing supply constraints and delivery delays.
IDC expects memory chip supply to remain tight into 2027, keeping prices elevated and contributing to revenue growth for distributors. The firm’s server market research found signs of enterprises pulling forward procurements to avoid further price hikes.
Channel analysts have diverging perspectives on the hardware boom. Canapii cofounder and former Canalys CEO Steve Brazier touted the infrastructure opportunity for partners during a keynote at the Canalys Forum EMEA in Barcelona last month. “The companies making their money today are involved in hardware,” he said.
Jay McBain, chief analyst at Channel Dive sister company Omdia, characterized hardware as a “point-in-time opportunity” rather than a long-term strategy, speaking at the same conference. The market for AI services, which Omdia expects to grow at a compound annual rate of 32.5% and reach $347 billion by 2031, is the better bet, he said.
The two perspectives aren’t mutually exclusive. AI adoption has increased the size of the tech market, with Gartner upping its global IT spending forecast to $6.37 trillion this year, up 14.2% from 2025. The analysis includes across-the-board spending increases in data center systems, devices, software and services.
TD Synnex CEO Patrick Zammit has been bullish on hardware since the middle of the year. The distribution giant grew revenues 38% year over year to $21.6 billion in Q3 and announced a deal with value-added reseller Mark III Systems to push Nvidia GPU sales through its distribution channels.
“AI factories have the potential to power transformative new products and services, but realizing that potential requires far more than access to compute,” Zammit said during a September earnings call. “Organizations will need support selecting the right models for the right workloads, deploying them on the right infrastructure and balancing performance, security and governance across edge, private, hybrid and public cloud environments.”
