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Kingston ‘Shoots for the Top’

Kingston Technology Inc. is working its way up the global leaderboard in a key product category that has vastly improved the performance of personal and corporate computers.

The Fountain Valley-based company holds the No. 2 position in solid-state drive channel shipments, behind only giant Samsung, according to a new report by market tracker Forward Insights in Ontario, Canada.

Kingston, the second largest private company in Orange County, with sales of $6.6 billion last year, had a 16% share of the SSD market in 2016. Samsung, the world’s largest consumer electronics manufacturer, is the segment leader with a 21% share, according to Forward Insights’ first annual tally of SSDs sold through the channel, or after-market through distributors, resellers, retailers, system builders and IT providers.

Global SSD shipments topped 63 million units last year.

“We’re shooting to reach the top,” Kingston SSD business manager Ariel Perez told the Business Journal.

SSDs use chips to store and transfer data and are becoming more popular in consumer products, such as ultrabooks and notebooks, and in industrial devices, such as automated manufacturing equipment, kiosks and video surveillance systems.

They are gradually replacing hard drives, which use spinning disks, in corporate networks due to their higher performance, reliability and longer battery life.

Kingston aims to build on the momentum from last year, when it grew SSD shipments about 15% to nearly 12 million units.

Its recipe for success incorporates several ingredients—some out of its control.

The company has been helped by the declining cost of SSDs over the last few years, which has brought affordability to a much broader audience, particularly in developing economies in Asia, Russia, Latin America and China. Kingston has also leveraged its deep supply chain across the globe and its reach in the consumer channel through its USB and flash card business, “which really helped us accelerate our efforts in SSDs,” Perez said.

Kingston is the world’s largest memory products maker for computers and consumer electronics.

A Private History

John Tu and David Sun established the company in October 1987 after leaving Irvine-based computer maker AST Research.

The duo had just lost millions in the 1987 stock market crash and “were totally broke,” Tu said in a 2012 interview for Kingston’s 25th anniversary.

In 1996 they sold 80% of the company to Japan-based Softbank Corp. for $1.5 billion, briefly trading its privately held status for public access on the Tokyo Stock Exchange.

They bought the company back at a steep discount three years later, took it private and built it into a global leader. Tu and Sun have always championed the company’s privacy and their own—rarely granting interviews or making public appearances, despite their philanthropic endeavors.

Memory Market

Kingston shipped its first SSD geared for corporate users in January 2009 when the cost of an 80-gigabyte drive was upwards of $600. The marketing message to potential clients at the time centered on extending the life of existing notebooks and desktops for a few more years with a simple upgrade over hard drives rather than refreshing an entire fleet of PCs at a steep price.

Today the cost of a gigabyte of storage is under $1 in many cases, and in some instances as little as 50 cents as chipmakers have improved processes, yields and scale over time. Ironically, those technological enhancements are now crimping global supply in NAND flash, the most popular rewritable memory chip used in USB drives, cameras, iPods, smartphones, tablets and other devices.

Big NAND chipmakers, such as Samsung, Intel and Toshiba, have exhausted the current standard of stacked 2-D wafer production and are in the midst of a transition to 3-D wafer production that increases chip density.

Demand has been fueled by the proliferation of mobile devices and other electronics that has taxed base memory components as they consume more data. That has limited NAND supply to Kingston for more than a year.

“Our growth would have been even stronger if we were in a time of steady supply,” Perez said. “There’s so much demand for flash.”

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