The way Kingston Technology co-founder David Sun tells it, the giant computer storage and memory products maker in Fountain Valley traces its roots to a fortune teller in Taiwan more than 30 years ago.
Sun says he and John Tu were taking a trip together to Taipei in August 1987 when Tu insisted on consulting a fortune teller, who told him he would find a business partner and start a company. About an hour or so later, Sun reluctantly went inside and heard the same message that included the future gazer’s prediction the business would be “very big.”
Shortly afterward the two men founded Kingston, now the world’s largest independent maker of computer memory and storage products, and the largest private company based in Orange County, with 2019 revenue of $12.8 billion.
“That’s a true story. It’s fate, it’s luck,” said Sun, the 69-year-old chief operating officer. “The fortune teller doesn’t know he and I are together. The only reason John wanted me to go in is to verify that I would be the partner.”
Tu, the other co-founder and now the company’s chief executive at age 79, points out with a chuckle: “I paid the fortune teller, actually.”
Tech Titans
Sun and Tu, each estimated to have a fortune approaching $6 billion, spoke to the Business Journal on Dec. 14, in a rare joint interview.
The Kingston co-founders were named the Business Journal’s People of the Year in the technology sector, as their company’s sales continued to grow in 2020 thanks to the proliferation of work-from-home computer users, as well as continued growth in the online gaming and esports industries, of which their HyperX division is a major player.
Their stand-out work in 2020 also touched on the local healthcare, education, and philanthropic sectors.
Tu is the primary backer of Fluxergy LLC, an early-stage medical diagnostic startup based in Irvine developing a new COVID testing system for use by physicians at the point-of-care. Tu’s investment was approaching $50 million as of May, while his son, Jonathan Tu, serves as Fluxergy’s chief financial officer.
Sun, meanwhile, made waves in OC’s philanthropic world via numerous charitable endeavors, including a significant partnership announced in February with Ron Simon’s Simon Scholars Program, which aims to advance educational opportunities and the well-being of the underserved.
Team Effort
While Tu says that luck, and good fortune, is a big part of Kingston’s success, he says there are plenty of other elements as well.
“The employees, the colleagues here, co-workers. Without them we would definitely not be where we are today,” said Tu.
Tu also gives a tip of the hat to his longtime business partner Sun, saying “without him we’d be nowhere.” The two men had worked together previously before founding Kingston in 1987.
They spoke from the company’s offices, which they still come to every day despite the coronavirus pandemic.
Memory Products
Kingston makes flash memory products, solid state drives and other computer-related memory products. Products bearing the familiar Kingston brand name include the ValueRAM line of memory and DataTraveler USB flash drives.
They’ve also staked out a share of the growing esports industry through the popular HyperX gaming products business, whose offerings include headphones and keyboards.
The company obtained the naming rights to the landmark HyperX Esports Arena in Las Vegas.
A large and growing portion of the company’s sales also comes via its “services division,” which includes the memory that Kingston makes on behalf of PC manufacturers. The division also makes embedded memory products for smart thermostats, smart watches, fitness bracelets, Bluetooth speakers and robotic vacuums that are manufactured and sold by other companies.
The founders sold 80% of Kingston to Japan-based SoftBank Corp. for $1.5 billion in 1996 and generously shared $100 million of the proceeds with employees. Tu and Sun bought back the 80% share in 1999 for $450 million.
Banner Year
It has been a steady climb upward for the company since the 1999 deal.
Sun predicted the just-ended year’s revenue would top $13 billion, adding: “I think it will be very good for 2021 going forward.”
“I think we are [in] the right marketplace, especially the cloud computing and the work-from-home,” said Sun.
“We are seeing the work-from-home and the cloud computing [grow], so we are adjusting our product line more into the home user as well as the high-end cloud computing,” Sun said. “Before we relied on distribution B2B, now we start implementing part of the business [to become] B2C.”
He added: “We are shipping a lot of products to consumers directly. We’ve adjusted our product line more to the home user.”
Kingston also makes memory products for cloud service providers.
The company’s operations, and sales, are global.
“We are in China, we are in Asia. We are in U.K. We are in the U.S.” according to Sun. “We have operations on every continent.”
Tu is originally from China, fleeing that country’s civil war with his family to Taiwan and then heading to Germany to study, before moving to the U.S. in 1972.
He once worked as a cook in his uncle’s Chinese restaurant. Among Tu’s interests is music, and is well known for playing drums in his band ‘JT & Friends,’ which has performed at various area fundraisers over the years.
Sun, who was born in Taiwan, arrived in the U.S. in 1977.
Operations, Ownership
“We are emphasizing more the U.S. manufacturing, we also emphasize Europe because of the Brexit problem,” Sun told the Business Journal.
“Latin America is booming right now for us.” “We are in the process of setting up some of the manufacturing in the U.S. to prepare if the world economy becomes more regional.”
“We are a good technology follower. We follow the technology, but we perfect what the new technology will be,” Sun said. “That’s not visionary. We adapt to what the change will be.”
The Kingston COO adds: “We are not leveraged. All the buildings – we own. We buy everything with cash. So, it’s all the Chinese way. We don’t have debt. Even if there is a crisis we can weather the storm better than other people.”
Mobile phones, the Internet of Things, artificial intelligence, PCs and autonomous cars are all computing devices and “we are part of the computing,” he said.
He added that the HyperX gaming products division would finish 2020 at no less than 30% to 35% growth.
China Tensions
Tu says he hopes for better relations with his native China under the Joe Biden presidential administration.
“I can feel the tension. I also worry about how the relationship—China-U.S. the future—how it’s going to develop, into what,” according to Tu. That includes the issue of trade tariffs.
“I think it is overdoing [it]. I hope that in the near future when we have a new government that things will—not to say disappear—but working towards a more reasonable way and more fair way, peaceful. It’s good for both countries.”
Philanthropy
Both men are active in a broad range of philanthropic work.
For example, the Sun Family Foundation’s activities, beyond its partnership with Simon Scholars, includes scholarships for students in Taiwan as well as services to underserved individuals and communities.
The John and Mary Tu Foundation’s many grant recipients have included the Pacific Symphony and Southern California Public Radio. Tu has also supported the education-oriented Freedom Writers Foundation.
Looking ahead, Sun didn’t indicate he’s consulted another fortune teller, but said he doesn’t foresee any dangers for the company on the horizon at the present time.
“I think the future should be good,” Sun said.
