Japan quake may push up memory product prices in Latin America - Kingston

- Tuesday, March 15, 2011

Japan quake may push up memory product prices in Latin America - Kingston

US memory device manufacturer Kingston Technology believes the recent magnitude-8.9 earthquake in Japan may make its components more expensive, thus resulting in higher memory prices for Latin America, Kingston's sales and marketing VP for Latin America, Carolina Maldonado, told BNamericas.

Roughly 40% of the world's NAND flash memory chips and 14% of DRAM chips come from Japan, and reverberations from earthquake damage on production will be felt as far away as Latin America.

"All of this will affect our operations.... We are telling clients to be patient," she said. "Memory is basically a commodity price that obeys the laws of supply and demand. If the supply of products is lower than global demand, then the prices will rise."

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Kingston saw Latin America sales increase 37% in US dollar terms and 45% in terms of unit shipments last year, but Maldonado noted that the Japan earthquake has thrown the 2011 regional estimates for a loop.

"We are in the middle of changes at the moment," she said. "I would expect to have similar results this year, but we're not sure about how much we can grow in units, for example. The situation in Japan can definitely change our outlook, because the material that is lost could translate into a lack of supply by May."

REGIONAL RISK FACTORS

Regional factors are also raising question marks regarding Kingston's 2011 business in Latin America. The company is wary of a bill that would stipulate local production of memory products in PCs sold in Argentina.

The new legislation "would directly affect us at Kingston because we are an import product for Argentina today," Maldonado said.

"We would have to find new business. Perhaps we'd have to focus on proprietary memory, which is more for the corporate sector, or memory for services. We have to try to diversify."

Argentina, together with Mexico and Chile, represents one of Kingston's longest-standing Latin American markets, according to the executive.

Globally, Kingston's sales spiked 58% last year, topping off at US$6.5bn.