Kingmax makes mint out of ancient memory

THERE'S GOLD in ten-year-old technology, according to memory module manufacturer, Kingmax. Despite offering cutting-edge DDR-II and mainstream DDR-I modules, Kingmax is still able to generate about 20 percent of its revenue from the truly ancient SDRAM. The reason, says sales and marketing VP, Lawrence Chang, is that hardly anybody else is making them.

As a result, Kingmax netted about US$50 million last year from a business that most others have written off, that's out of the company's total memory module revenue of around $250 million. In addition, profit margins on SDRAM are better than they were when the memory standard was in its prime, and better than those on DDR.

Who's buying the geriatric modules? Not surprisingly, it's users of geriatric PCs. A surprising number of older PCs are still in use. This is in part because they can still run most office and productivity software almost as well as more recent models. Often, the only thing they need to cope with the latest applications is more memory. "We're doing channel business, so we still have much demand for upgrades," says Chang, "both notebook and desktop."

But it's a tricky market to make a profit in. Kingmax can package the silicon and put the packaged chips onto modules, but it needs to get its chips from somewhere. And, because very few memory manufacturers still make the SDRAM chips that Kingmax packages and builds into its modules, the company needs to order three months in advance, so the chip manufacturers can time their infrequent SDRAM production runs. "This isn't mainstream anymore", says Chang, "so they don't want to keep too much stock."

Kingmax, headquartered in Taiwan, currently holds around 3 percent of the global memory module market. The company manufacturers its products in Taiwan, with a new factory in Shenzhen, China, about to open. Kingmax predicts revenues this year to grow to US$300 million, but it's unlikely any of that growth will come from SDRAM. µ