TD Synnex CEO Sees Growth Opportunity As Vendors Favor Global, End-To-End Distributors

TD Synnex CEO Patrick Zammit says strong channel and Hyve demand, AI-driven infrastructure spending and vendor moves favoring global, end-to-end distribution helped fuel the distributor’s 31 percent revenue growth and create new opportunities for its HPE and Dell partners.

TD Synnex is seeing broad-based demand across its distribution and Hyve hyperscale infrastructure businesses, with CEO Patrick Zammit pointing to strong execution, disciplined cost management and a favorable market backdrop as key drivers behind the distributor’s second-quarter results.

In a wide-ranging interview shortly after TD Synnex released its second fiscal quarter 2026 financials, Zammit told CRN that the distributor grew at roughly twice the pace of the market while maintaining margin quality, helping drive what he called “an incredible 60 percent EPS [earnings per share] growth.”

Zammit said price increases have so far had only a limited impact on growth, with 300 to 400 basis points tied to average selling price increases and pull-ins, but he warned the pressure is likely to intensify in the coming quarters as component costs work their way through the supply chain.

[Related: Dell Technologies Terminates Enterprise Computing Distribution Deal With Arrow: Sources]

“We are not out of the woods, and we should expect another wave of price increases in July,” he said.

Despite those pressures, Zammit said demand from the channel remains resilient, particularly as end customers continue to invest in AI, data center modernization, Wi-Fi 7 networking and infrastructure refreshes. TD Synnex has increased distribution inventory to help customers manage the transition, a move Zammit said was designed to “smooth the transition with ASP increases” and support partners as vendors raise prices.

Zammit also discussed TD Synnex’s expanding strategic position with hyperscalers and vendors via its Hyve digital infrastructure business. He also discussed Amazon’s warrant agreement with TD Synnex as a vote of confidence in the distributor’s execution and long-term role in hyperscale infrastructure, saying Amazon would make such a move only if it believed TD Synnex was “a reliable partner for the long run.”

On the traditional distribution side, Zammit pointed to TD Synnex’s selection as one of two HPE global distributors, as well as Dell’s decision to end its Arrow ECS relationship, as signs that vendors are increasingly favoring distributors with global scale, technical specialization and end-to-end portfolios.

“If you are not end to end with some of the vendors who play in these markets, you are at risk,” he said.

There’s a lot going on with distribution and at TD Synnex. To learn more, read CRN’s discussion with Zammit.

What’s your big takeaway from TD Synnex’s second quarter?

We started with a good market environment. I think it’s important to speak about it. When I look at demand, it’s strong both for Hyve and for distribution. When you look at distribution, it's strong across all the regions, and it’s strong across all the technology. It’s a broad-based healthy demand. So that’s encouraging. Lots of tailwinds. I think many of them will continue in the future. I talked about PCs, [the one area] where we’ll probably see a unit decline, but with ASPs [average selling prices] increasing, I think in revenue it’s going to be fine. Second, in this market environment, we did very well. We grew at about twice the pace of the market, which is quite remarkable because we have a high [revenue] base, so that was impressive. The team did a fantastic job. Also, we didn’t do it at the expense of the margin quality, which means that the discipline, the focus on the mix is paying off. Our costs are very well managed, and so the vast majority of the GP [gross profit] increase goes to the bottom line, which explains why we had an incredible 60 percent EPS [earnings per share] growth.

TD Synnex reported 31 percent revenue growth over last year. How much of that was due to price hikes from the vendors as opposed to increased unit sales?

We are trying to distinguish between increase in units and increase in prices. We think that only, let’s say, 300 to 400 basis points of the of the growth is explained by both ASP increases and pull-ins. We should not forget there are a lot of categories with no price increase or very little: software, public cloud and so on. It’s relatively limited. Networking was relatively limited. So you’re talking primarily about server, storage and PCs where we see increases. Second, I think the impact of price increases is going to become more meaningful in the coming quarters. The reason is it takes some time. We hold inventory. Our resellers hold inventory. And so price increases take some time to hit the market. So the impact is increasing. We had very little in Q1. Q2, it was more significant. I think Q3 will be even more significant.

In the categories with the biggest price increase, most of it was related to the component cost increase. But let’s not forget that the vendors also are allocating their memory, for instance, to the midrange and the higher range of their product portfolios, and so that also drives prices up.

So you’re expecting the third quarter will probably be even more difficult in terms of pricing because of components and what’s going on the manufacturing side. When do you expect to see relief?

I’m looking at what our vendors are sharing with us, the component vendors in particular, and the consensus at the moment is that the situation will last until at least the end of the first half of 2027. Some vendors are even more pessimistic and saying that it’s going to be through the whole of 2027 and potentially even 2028. So we’ll see. … We are not out of the woods, and we should expect another wave of price increases in July.

TD Synnex’s business is divided into traditional distribution and its Hyve hyperscale digital infrastructure business. When you look at component shortages and availability, do they impact Hyve and distribution differently? Does either side have better access to these components?

First, in Q2, we didn’t really suffer from shortages. Second, in fact, and it may surprise you, but when it comes to Hyve, it’s the hyperscaler customers negotiating the quantities and the price with the component manufacturers, not us. Obviously, they have their negotiating power. On the distribution side, we take care of it. We haven’t been confronted by a major shortages issue. No issues came to me. No escalation. So I see it as a good sign, We’ll see in Q3 how it goes. Our guidance assumes some constraints. We’ve been a little bit cautious in our guidance because of that, but yes, we’ll see.

TD Synnex’s Hyve business has programs with all five of the major hyperscalers, and more than one program with a couple of them …

In fact, with three of them, we have more than three programs running.

When you say ‘program,’ what do you mean?

It’s a rack of compute. It’s a rack of networking.

As part of that, last month TD Synnex granted Amazon a warrant to acquire up to 3,238,066 shares of its common stock. What’s behind that?

The vesting of the warrants is linked to them doing a certain level of business with us. … It means that they believe that we are a reliable partner for the long run. They only do those type of things if they believe in your value proposition and the quality of the execution. Otherwise, they won’t do it. Second, if they want to get the full benefit, they have to place the orders with us and so it gives us a high level of confidence that the business relationship with Amazon is going to continue to grow going forward. Of course, in return they believe that they will contribute to the growth of our profitability, and if they do it will result in the increase in the share price. That’s their bet. So it’s a win-win for both parties.

Will you do this with other hyperscalers?

No. I think it’s something Amazon has developed for many years. By the way, we are one of the last contract manufacturers to sign this warrant. Jabil and Flex already had it, but I’m not aware of any other hyperscaler taking a similar approach.

On the distribution side, are average selling price increases hurting demand or not?

From the channel, not yet. As I said, we grew units across the whole portfolio, so I would say no. Then, to be a little more specific, if you look at our guidance for Q3, our assumption is that PC unit sales will decline a little bit. There are some forecasts coming from analysts. But we only play in B2B, and we think that in B2B the elasticity is lower. Second, we plan to continue to grow share. We are planning for a decline, but the decline should be less than that of the overall market.

When you look at networking, the networking business is back. Lots of investments: upgrading Wi-Fi networks with Wi-Fi 7, upgrading the data center switches to be optimized for AI. So you have a whole refresh happening as we speak. And I think storage and compute in the data center will continue to benefit from data center modernization and AI.

Are those price increases changing buying patterns at all?

I look at my pipeline and my backlog, and I would tell you, no. It’s not obvious for the moment. We are very vigilant. I’m meeting with our customers to get more insights, but so far we haven’t seen any major change. End users have to invest in AI. They don’t have a choice. Yes, we’ve had those big price increases. On the other hand, if you ignore agentic AI, you may not be competitive. So I think everybody has to invest now.

Is TD Synnex’s inventory on the distribution side increasing or decreasing?

It has increased because we anticipated the price increases and we wanted to be in a position to support our customers. We can smooth the transition with ASP increases, thanks to our inventory. We’ve done it now for two or three quarters, and we continue to do it.

So do you expect inventory in the third quarter to rise above second-quarter levels?

That I don’t know. It depends how we see Q4. But yes, we ended the quarter with a high inventory, and we are very comfortable with it. We think it’s going to help our customers.

TD Synnex was recently named as one of two HPE global distributors. What does that mean for TD Synnex and your HPE channel partners?

For us, it’s great news. Let’s put it in context. More and more vendors are revisiting their go-to market. They are revisiting the number of partners they want to serve direct, and they are revisiting the number of distributors they want to keep on in their portfolio. I think HPE would like to do that globally. So basically they believe that engaging with global distributors, TD Synnex and Ingram Micro, is going to facilitate the management of their channel strategy. That’s the context. The results for us more specifically are that we are going to be franchised in countries where we are not now franchised, in Europe, in APJ [Asia-Pacific Japan] in particular. It means we will get access to the Juniper product portfolio. It means we have the possibility to win some of the business of the distributors who will be terminated. So for us, it’s a win. It’s a win for HPE, which simplifies its go-to market, especially in dealing with a global business. And for us, it’s a win because it opens new opportunities for growth globally.

Also, did you see CRN’s reporting that Dell is ending its Arrow ECS relationship?

I read it while talking to analysts. It was a very good article. The thing which was very interesting, well, let’s put it in context. I was surprised that you mentioned the fact that Arrow not being a PC distributor was part of the decision, and so that’s very interesting. Basically, that reinforces our strategy. Many years ago, we declared that we wanted to be an end-to-end distributor. The reason at the time was that we felt that our customers had to deliver business outcomes, so we had to be in a position to offer the full portfolio. When I took over as CEO, I mentioned that in Europe and North America we were already there with this end-to-end strategy, but in Latin America and APJ we needed to accelerate the execution of the strategy. Basically, Dell’s decision with Arrow is just reinforcing the strategy. It’s an interesting decision, but it’s also a message sent to the market that if you are not end-to-end with some of the vendors who play in these markets, you are at risk. Yes, so that’s my reading of the decision.

[We knew about this] because it was a proper RFP. We were anxious to get the outcome. So we knew about the outcome. But for me, what is important again is always to zoom up and look at it from a strategic standpoint. You can see that there are some themes emerging in the market from the vendors. More and more vendors are going to put more emphasis on and reward you for being more specialized, more certified, more competent in the technologies you take to market. It’s the whole value approach. That’s at the core of our model.

Recently we’ve seen HPE and Microsoft favoring global distributors versus local. That’s a theme which I think is going to get more traction. And now you have this end-to-end dynamic happening [where] our vendors are revisiting their go-to-market, and the level of requirement for distributors and the channel in general has increased. Strategically, it will have consequences for the distributors who are not ticking those boxes.

Is TD Synnex looking to compete for the business of channel partners who may not be able to work with Arrow on the Dell side?

As you wrote, now Dell’s partners have to find a new place. Some of them will go direct, but many of them will look for another distributor, especially as Dell has also rationalized the number of partners they want to serve direct. So it’s an opportunity for us. Let’s be clear.

To be sure, TD Synnex continues to be a Dell distributor going forward, right?

Absolutely. We’ve been a strategic partner for Dell for many years. We won the Distributor of the Year award, and so on. So we’ve had a long-term, close relationship. The Dell relationship is strategic to us, and we were very pleased to be reconfirmed as a distributor. We have a good market position, and we think we are well positioned to support the resellers who are looking for a new distributor.