TD Synnex’s CEO, Patrick Zammit, sees AI changing the economics of IT in a way that makes hardware more attractive again.

As AI vendors move from flat subscription pricing to per-token billing, many customers are seeing an explosion in AI-related cloud and SaaS costs. Those rising token costs are prompting organizations to rethink where they run AI workloads.

Zammit’s view is that this cost pressure is turning AI into:

• A threat for some software models (especially cloud-only, consumption-heavy services)
• An opportunity for hardware, as companies look at on-premises and edge infrastructure to control spend

In his words, “hardware could become sexy again” because:

• On-premises infrastructure can help mitigate unpredictable AI token bills.
• Enterprises are exploring in-house data centers, colocation, and edge devices to run AI more cost-effectively.

For TD Synnex and its partners, this shift means renewed demand for PCs, servers, networking gear, and edge hardware as part of AI strategies that balance performance with cost control.

Component shortages and price swings are reshaping how distributors, partners, and customers approach hardware procurement.

TD Synnex has already navigated a period of memory and storage chip shortages, while also benefiting from PC price hikes and higher server and networking gear costs. These dynamics helped drive the company to more than $62.5 billion in revenue in its 2025 fiscal year and to record quarterly revenue in the three months ended February 28.

However, Zammit highlights a delicate balance:

• Shortages can reduce unit sales because products simply aren’t available.
• At the same time, they can push up average selling prices (ASPs).
• If ASPs climb too high, customers delay or cancel purchases.

With analysts forecasting component shortages through the end of 2027, TD Synnex and partners are adjusting tactics:

• Stockpiling and warehousing: TD Synnex began boosting inventory in late 2024, buying PCs, servers, and other hardware to buffer customers against rapid price changes. CBTS, a managed service provider and VAR, started stockpiling in May for the same reason.
• Deal timing: Extra inventory gives customers more time to get approvals in place before prices move again.

Customer behavior is also splitting, according to a Westcon-Comstor survey of more than 100 partners:

• Over half said customers are pulling forward hardware purchases to get ahead of further price increases.
• Nearly one-quarter reported delays or cancellations of hardware procurement.
• IT service providers are helping clients delay refresh cycles by optimizing storage, reducing RAM needs, and shifting workloads to managed services.
• Nearly half of respondents said customers are willing to switch vendors in this environment.

In short, volatility is pushing some buyers to accelerate purchases and others to stretch existing assets, while distributors like TD Synnex use inventory strategy to smooth out the impact.

Major technology vendors are reimagining their go-to-market models, and that is reshaping the distribution landscape.

Vendors such as Dell, Microsoft, and Broadcom (via VMware) are trimming the number of direct resellers and distributors they work with, and increasingly favoring large, global distribution partners. Patrick Zammit describes this as a clear trend, not a one-off move.

Recent examples include:

• Dell dropping Arrow Electronics from its distribution ranks while maintaining relationships with large global distributors.
• HPE shifting the bulk of its distribution to two global providers: TD Synnex and Ingram Micro, while Arrow remains an HPE distributor in the Americas and EMEA.

HPE’s channel leadership framed this as building a simpler, more scalable model for long-term partner and customer success, supported by a mix of regional and specialist distributors.

TD Synnex has been preparing for this environment for years by positioning itself as an end-to-end distributor with a broad vendor portfolio. The strategy is to help resellers deliver business outcomes rather than just point products, which means:

• Offering a wide range of technologies across hardware, software, and services.
• Maintaining and expanding key vendor relationships as the channel consolidates.

For partners, this consolidation can mean:

• Fewer distribution options with certain vendors, but deeper engagement with those that remain.
• Access to a broader portfolio through a single distributor, simplifying procurement and integration.

As more vendors rethink their routes to market, TD Synnex aims to use its scale, global reach, and diversified portfolio to support partners through the transition.