Call them the comeback kids.
Kingston Technology Co. cofounders David Sun and John Tu saw a big year in 2010 by steering a remarkable recovery for their Fountain Valley-based company after two tough years.
The pair earned a nod in our businessperson of the year coverage by seizing on rebounding demand for memory products.
Kingston grabbed market share from rivals and is expected to report record revenue of about $6 billion when the books close on 2010.
“All signs indicate record revenue for Kingston,” said Sun, the company’s chief operating officer. “We were able to increase unit shipments this year to meet the high demand for all of our products.”
Memory Chips
Kingston buys memory chips from Asian, European and U.S. suppliers and assembles them onto circuit boards for computers.
In the first half of 2010, the company had 46% of the market for the most common type of memory modules for computers, up from 40% share at the end of 2009.
About a quarter of Kingston’s business is flash memory that goes into cards and portable drives for computers, cameras, cell phones and video game consoles.
The company is the second-biggest maker of flash products in the U.S. after Milpitas-based SanDisk Corp. In other countries, Kingston’s No. 1 followed by SanDisk.
Kingston’s sales got a boost last year from a rebound in memory chip prices, which pushed up prices on its products.
Revenue for dynamic random access memory chips—the most common kind found in memory modules—grew 50% in 2010 from 2009, according to Stamford, Conn.-based market researcher Gartner Inc.
Privately held Kingston is set to report 2010 sales in the spring. It doesn’t disclose profits or other financials.
If Kingston nears $6 billion in revenue for 2010, it would put the company ahead of Newport Beach’s Pacific Life Insurance Co. as the largest private company in Orange County.
Pacific Life has about $5 billion in yearly revenue.
In 2009, Kingston reported 2009 sales of $4.1 billion, roughly flat from 2008.
Kingston’s biggest coup in 2010 was outpacing its rebounding market.
During the first six months of 2010—the most recent data available—Kingston grew memory module revenue by 46% from the end of 2009 to $2.6 billion, according to data from El Segundo-based market tracker iSuppli Corp., a unit of Colorado’s IHS Inc.
The overall memory module market grew by 26% during the same period.
Kingston was able to expand its lead over rivals because “it used its prodigious buying power during a time of rising module costs to gain share,” according to Clifford Leimbach, an analyst covering memory demand forecasting at iSuppli.
Competition
After Kingston, Taiwan’s A-Data Technol-ogy Co. had 7.6% of the module market. China’s Ramaxel Technology Ltd. was third at 7%. Idaho’s Micron Technology Inc. had 5.9%, while Northern California’s Smart Modular Technologies Inc. had 5.8%.
2011 could be more challenging.
A “soft landing” is predicted for the chip industry as a whole in 2011 with 5% growth projected, according to iSuppli.
Smart Modular, one of the few publicly traded memory products companies, warned in December about its first- and second-quarter results amid a drop in memory chip prices.
Slowing demand and an oversupply of chips stand to put an end to the industry’s 2010 rally.
Chip prices are falling by 20% to 25%, according to Smart Modular.
