Dive Brief:
- Token costs may drive enterprises to invest in on-premises infrastructure for AI workloads, TD Synnex CEO Patrick Zammit said Thursday during the technology distributor’s Q2 2026 earnings call for the three months ended May 31.
- “Hardware is becoming a very interesting category again and could be poised for very interesting growth,” Zammit said. “The cost of tokens could have a very positive impact on on-premises hardware, both in the data center but also at the edge.”
- TD Synnex had a record quarter, according to EVP and CFO David Jordan. Gross billings increased 33% year over year to $28.9 billion, with the company’s channel-focused distribution division delivering $23.4 billion. PCs, servers and networking accounted for more than half of distribution billings, per the company’s quarterly earnings report.
Dive Insight:
TD Synnex has benefited from a tightening market for memory and storage chips over the last several quarters. As component shortages continued to drive up hardware costs, many organizations accelerated procurements to stay ahead of rising prices.
Large channel distributors stockpiled inventory and passed the added costs on to their partners and, ultimately, to buyers.
“We're a cost-plus business,” Zammit said. “If costs increase, we pass it to the customers. We have no other choice.”
Jordan provided a qualification, noting that the company aims to secure sufficient supply to help its partners weather supply constraints.
“In a rising price world, we can benefit from that,” Jordan said. “If prices continue to rise, there will be a benefit, but we're also not greedy as it relates to this. We want to be paid for the additional capital that we've got deployed, but we also share some of these benefits with our customers as well, so we can build better long-term partnerships.”
Gartner estimated that dynamic random-access memory and solid-state drive costs will more than double by the end of the year, increasing PC prices by 17% year over year. Earlier this month, IDC forecasted a more than 11% decline in global PC shipments in 2026, with a steep 20% year-over-year dropoff in the fourth quarter.
Server shipments, which surged during the first three months of the year, are also expected to stall as prices rise, Lidice Fernandez, IDC’s group VP for worldwide enterprise infrastructure trackers, told Channel Dive in March.
Despite the strong quarter for distribution and an ongoing hardware refresh, Zammit was circumspect about the market.
“The category I'm watching is PCs, with some caveats,” Zammit said. “You still have many enterprises or companies who have to upgrade their PCs, but that's probably the category where I am the most cautious.”
IDC expects the component crunch to persist beyond next year, according to a report published this week.
“The gap between players who have locked supply and those who haven’t is widening,” Soo Kyoum Kim, IDC associate program VP for semiconductors and enabling technologies, wrote. “Major memory producers have been explicit in their public guidance: tight conditions are not a short-term anomaly. That’s not analyst projection. It’s the market telling you what to plan for.”
TD Synnex is already bracing for another round of PC and server price hikes.
“By the way, we're expecting some new price increases in both categories in July,” Zammit said. “The price increases are not over.”
