Dive Brief:
- TD Synnex got a boost from rising component prices amid pervasive shortages of memory and storage processors during the first quarter of its 2026 fiscal year, executives said during a Tuesday earnings call for the three-months ended Feb. 28.
- The distribution giant saw revenues jump 18.1% year over year to $17.2 billion, significantly exceeding prior guidance for the quarter, according to quarterly financial documents. The company’s global distribution segment yielded $22 billion in non-GAAP gross billings, growing 17% year over year.
- “We estimate that approximately two percentage points of year-over-year gross billings growth were attributed to higher average selling prices and modest pull-forward activity, as we partnered with OEMs to pass through higher memory and component cost,” EVP and CFO David Jordan said during the call.
Dive Insight:
TD Synnex saw the writing on the wall late last year as memory and storage chip shortages began to emerge, driven by an AI infrastructure building boom. The company responded by stockpiling hardware and preparing its vast channel ecosystem for a component crunch, which is now expected to persist into 2027.
“We built inventory at the end of last fiscal year to be able to cope with or, I should say, smoothe the introduction of price increases for our customers,” Patrick Zammit, TD Synnex CEO, president and director, said during the Tuesday morning call. “What we've done is to work closely with both the vendors and our customers in order for them to be in a position to anticipate some of the price increases and reflect it in their quotes.”
The company has protected its margins thus far, despite double-digit cost increases across a wide portfolio that includes PCs, servers and core data center components, Zammit added.
While prices haven’t dampened demand, they have changed the sales calculus. Partners can absorb the price hikes or pass them onto customers, with the hope that sticker shock won’t deter procurements.
“We have worked hand in hand with both vendors and customers to raise pricing on a variety of infrastructure products,” Jordan said. “For the moment, demand remains quite strong, and it is true in some of these categories, the price increases are double digits. Our current thesis is that while there will be some elasticity around unit demand, our belief is that the price increases will more than offset that.”
