TD Synnex CEO On Hyve Momentum As AI-Linked Data Center Demand Accelerates

‘[Hyve’s U.S.-based footprint is] important because, as you know, in today's environment, the ability to produce in the U.S. from a sovereignty standpoint, from a proximity standpoint, to provide the flexibility when our customers want to ramp up, is a clear differentiator, and that's one of the advantages of Hyve,’ says Patrick Zammit, president and CEO of TD Synnex, in an interview with CRN.

TD Synnex’s Hyve business delivered standout performance in the IT distributor’s fiscal 2025 fourth quarter, posting more than 50 percent growth in gross billings driven largely by hyperscaler data center investments and the payoff from earlier program wins.

Patrick Zammit, president, CEO and director of TD Synnex, which has dual headquarters in Clearwater, Fla., and Fremont, Calif., attributed the surge to a combination of steady growth in Hyve’s core original design manufacturing (ODM) and custom manufacturing (CM) programs, along with more opportunistic data center supply chain services.

Those services include strategic component buys in which hyperscalers ask Hyve to secure pricing, hold inventory, and manage supply risk in exchange for a margin, Zammit (pictured) told CRN. While this part of the business is inherently lumpy, smaller comparisons in prior quarters amplified the growth rate in Q4, pushing results above expectations, he said.

Hyve’s U.S.-based footprint, where over 70 percent of that organization’s engineering and production resources are located, is another differentiator, Zammit said.

“It's important because, as you know, in today's environment, the ability to produce in the U.S. from a sovereignty standpoint, from a proximity standpoint, to provide the flexibility when our customers want to ramp up, is a clear differentiator, and that's one of the advantages of Hyve,” he said. “The other one, which is very interesting, is our engineering capabilities, whereby more and more, the hyperscalers are looking at co-designing, and they expect us to have engineers to help them co-design. And that's where we have invested. ... We can support the hyperscalers globally as a result.”

Beyond Hyve, TD Synnex reported strength in its PC distribution business, and Zammit said he expects the Windows 11-driven refresh cycle to extend into the first half of the year, supported by rising adoption of higher-priced AI PCs. Increasing DRAM and SSD prices are also boosting average selling prices, creating a near-term tailwind, though he cautioned that sustained price increases could eventually impact volumes.

There’s a lot going on at TD Synnex. To learn more, read CRN’s full conversation with Zammit, which has been lightly edited for clarity.

Hyve did very well. What's behind the 50 percent growth in gross billings at Hyve?

We don’t have the growth [numbers], the increase in investments, from the hyperscalers for Q4. But for Q3, there was roughly 36 [percent or] 38 percent growth in investment. We had 39 percent [growth], so it reconciled very well. Hyperscalers continue to invest in their data centers. We are participating through a series of programs. And Hyve has got this ODM [original design manufacturing] and CM [custom manufacturing] activity and has what we call DCSCS [data center supply chain services], call it supply chain and strategic buys, which is a more opportunistic business. It's really a service we render to the hyperscalers. They tell us, ‘OK, we would like you to secure pricing for these components. Can you buy the inventory and hold it for us. You get a margin on it.’ This is a more opportunistic, lumpy business. But then in Q4, we had very small quarters, so the growth exceeded 50 percent, and it was better than expected. So the combination of the two, very solid growth in the ODM/CM business related to the investments plus some specific special supply chain and strategic buy activities, explains the hyper growth.

Is this growth in Hyve the result of the recent growth in hyperscaler data center spending? Is it related exclusively or primarily to the data center build-up for AI we’ve been seeing?

Absolutely it's related to the investments hyperscalers are making in that data set, in their data center. Absolutely that's related to it, not all of it. By the way, in our case, we are the programs we support, primarily networking and CPU programs, not so much the GPU, but yes, it's for the data center of the hyperscalers, and it's to support the hyper growth.

You mentioned in your prepared remarks that Hyve brings a U.S.-based footprint. How important is that?

More than 70 percent of our resources are based in the U.S., including engineering and production. It's important because, as you know, in today's environment, the ability to produce in the U.S. from a sovereignty standpoint, from a proximity standpoint, to provide the flexibility when our customers want to ramp up, is a clear differentiator, and that's one of the advantages of Hyve.

The other one, which is very interesting, is our engineering capabilities, whereby more and more, the hyperscalers are looking at co-designing, and they expect us to have engineers to help them co-design. And that's where we have invested. It’s a second key differentiator for us. We can support the hyperscalers globally as a result. The vast majority of our business is in the U.S., but we support customers in Europe and in APJ, but the volume there is much lower.

It was interesting to see the 50-plus percent growth of Hyve this past quarter compared to the fourth quarter of last year when the Hyve business declined. That was a pretty big contrast. ...

The team has done a lot of work winning new programs, plus we had the ramp up phase, so some of the programs were already won last year. And then we needed to wait a few quarters until we saw the ramp up and translate it into billings. That's the story. We are very pleased. Very pleased. The team has been very focused. The investments in capacity and capabilities are paying off, and that's what we are seeing today. The hyperscale [businesses] also had the demand, and we benefited from it.

How have component pricing issues—memory, storage, SSDs, flash storage—impacted IT distribution?

In Q4 it was, it's difficult to assess, but it didn't influence our Q4 results.

How about IT distribution in general? What's the impact?

Difficult to say. I would say up until November, I think for distribution in general, it should be limited. In December, it could be that some of our competitors will benefit from it. We'll see. We are waiting. We are very interested to see [our competitors’] results.

How is the PC business via distribution? What do you expect to see in 2026?

In Q4 we had a very strong quarter in PCs. I mean, 18 percent growth. For us, it's a category which is very important where we continue to grow faster than the market. For next year, the PC refresh cycle is not over. It started later than expected, so I expect the refresh cycle related in particular to Windows 11 to last through Q1, probably also in Q2, but the future will tell. But we still need to go through the refresh.

The second thing is we see the total purchases of AI PCs continue to increase. And the ASP [average selling price], because it's an AI PC, is higher, so that's a tailwind

Third, with memory prices increasing, I mean DRAM and SSD, the vendors are already passing some significant price increases, high single digits to double digits, and it's going to be a tailwind for us, at least in the short term. The question is, will it have an impact on the volumes. It depends on the increase in prices and the budgets of the end customers. People may say, ‘Oh, we need to delay some of the investments.’ So the future will tell.

I'm going to make two remarks. The first is that we primarily sell to the commercial segment, not the consumer segment. I believe that here the elasticity is less when you increase prices. Companies have their budgets, but if they have to replace a PC, they will do it even if you have a significant price increase. Second, we just need to go back to what happened in 2025 with the tariffs to see what's going to happen. Same questions. How big will the tailwinds from ASPs be or the headwinds from volume because of the ASP increase. The picture is looking pretty good. I don't know yet what will happen, but I would say that I continue to be cautiously optimistic for the PC category and optimistic for the first half of this year.

In terms of the overall market, and not just PCs, do you see business customers and channel partners increasing their orders now in order to stock up before price increases?

In Q4, no impact. In Q1, we could start seeing some. The future will tell. For our guidance, we did a bottom-up exercise that took into consideration several factors, so it's possible. The thing which is interesting is today, when you get a quote, the quote is valid only for two weeks max. So is there going to be a big bringing forward of orders to anticipate price increases? I would say the vendors have been very quick, have communicated extensively. So let's see how big the impact will be.

You just said there’s a two-week price lock for orders today?

Yeah, when you give a quote today. It's valid for two weeks. That was the status just before December. Maybe it's even shorter now. Let's see. I haven't checked, but yeah, you just have a two-week window of opportunity.

Has it ever been that short before?

I don't remember.

How do you see price trends for IT overall in 2026?

PCs, servers, and storage will be impacted by the increase in component prices. So I expect the ASPs to go up low-to-high double digits. So yeah, there will be some inflation, totally speaking.

What's the good news for the IT industry in 2026?

I think there’s the need to invest in AI, which will come from enterprises. Agentic AI is becoming a true use case. Companies are making good progress in identifying the applications. That also means a refresh of the infrastructure, investments in upgrading infrastructure. So I think that could be a positive for the industry. For the cloud in general, we continue to do well. Security should continue to do well.

You have two categories which have not been so great this year. The first one is storage, and the second one is networking. With the need for data center modernization, especially to support AI, hopefully this year we are going to see an improvement in the storage market. Networking last year was very muted, a flat to slightly declining market. So I would not be surprised to see the long-awaited recovery of that market in 2026. So those are two tailwinds which could be beneficial.

For 2026, what are your new strategic priorities for TD Synnex?

No new strategies, but we continue to execute on our strategy. We continue to have several priorities. The first one is global expansion. We believe in being an end-to-end distributor, so [the second is to] expand the technologies and the vendors which are missing on our line card in every country where we operate. Third, we continue to invest to deliver best-in-class enablement programs to our customers, including some pre-sale and solution architect resources. And the fourth is digitalization. Digitization includes investment in our PartnerFirst platform, but we will also continue to invest in AI to improve our operating model. And these are really the key priorities for next year.

You just said you'll be looking to fill in some vendors and technologies missing in TD Synnex’s line cards. In North America, what are the technologies you think are missing from your line card that you really want to focus on this year?

In North America, I think we have a fantastic portfolio, and we're extremely well positioned across the board. I was thinking more about Europe with security. I was thinking more of APJ and Latin America, where we have a lot of potential for growth in endpoint and security. In most countries, especially in APJ, Eastern Europe, and Latin America, some of our market positions are weaker in some technologies, either because we've been the challenger or because we've been missing some vendors.

Our approach is country by country. We look at our market position and where are the best opportunities to complement our portfolio from a technology and vendor standpoint, and then we act. That's what we do. So imagine a nice dashboard with all the technologies and vendors which are critical, and then you match it with the countries, and that's what we are actively working on to fill. By the way, we do it organically, primarily, but if we have a good acquisition to accelerate the execution, we'll do it.