The Fountain Valley[Calif.]-based company is the biggest maker of memory modules -- circuit boards loaded with memory chips that speed the performance of computers and consumer electronics.

Kingston's growth has been crimped by a year-long surplus of memory chips made by big chipmakers in Asia and Europe.

As the price of these chips fell, so did prices -- and profits -- on Kingston's products.

"This was perhaps the worst we have seen," said Al Soni, vice president of alliances for Kingston. "The declines were very steep and lasted for many months."

Kingston, which has 25 percent of the market for memory products, saw 2008 revenue fall 11 percent to $4 billion. The privately held company doesn't disclose profits or losses.

The price declines were in part due to a fire sale on memory chips, as chipmakers rushed to get rid of their stockpiles in fear of even lower prices.

Things have improved since then with some predicting better days ahead.

"I think the worst happened at the end of last year," said Jason Liang, director of supply chain for memory products at Kingston. "The overall price had reached such a level that revenue was hard to sustain. Our situation is improving, so our overall performance should start to get better."

Since the start of the year through July, the most recent data available, average selling prices for a gigabit of the most common type of memory chip were up 27 percent, according to Semico Research.

Overall, prices still are down 19% from August 2008 through July of this year.

Below Cost

For most of this year, the going price of dynamic random access memory chips has been below the cost of producing them, which hovers at around $1.50 per 1 gigabit chip, according to Soni.

The price declines caused a wave of losses and an industry shakeout among memory chipmakers.

Germany's Qimonda AG filed for bankruptcy in January. It's set to sell off its U.S. operations in Richmond, Va., to Texas Instruments Inc. for $173 million.

South Korea's Samsung Group and Hynix Semiconductor Inc. have cut their production and are looking to sell older chip factories.

A handful of Taiwanese chipmakers were forced to consolidate earlier this year to survive. The tiny island was home to some half a dozen memory chipmakers. (continued...)

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