Kingston Technology has cited strong sales of memory products into the system builder arena as the key reason for its decision to significantly expand its manufacturing capacity in China.
The firm will relocate from its 50,000 sq ft plant to a new 200,000 sq ft facility, in Shanghai's key technology district, nicknamed 'Silicon Harbour'.
Kingston, which has the option to expand to an additional 200,000 sq ft facility, will ramp up its China operation from 1.5 million units a month to five million units. The new plant will be in operation from January 2005.
The company has claimed that surging demand for its ValueRam product line, which is targeted at system builders, is the reason for the move.
"ValueRam is just three years old now and in the past year alone, its revenues have almost doubled," said John Holland, Kingston's vice president of European sales. "ValueRam now represents roughly half of our business in Europe."
Holland added that the Chinese market is exploding. "In a matter of years it will be the world's largest PC market," he said.
"It's no surprise many firms are moving manufacturing operations to Shanghai. Apart from the obvious cost benefits there is also a robust infrastructure geared towards IT and a highly skilled workforce."
Memory rivals Infineon and Samsung have also been part of the recent flood of companies taking the Chinese route. Infineon has just announced the opening of its new China headquarters in Shanghai.
The German memory company already employs 800 people in China, but aims to boost this to about 3,000 in the coming years.
"We have set ourselves ambitious goals in China and are confident we can achieve them," said Dr Ulrich Schumacher, president of Infineon. "In the next five years we aim to double our market share in China to 10 per cent."
Samsung, the leading memory maker, has announced it will move most of its PC manufacturing from Korea to China by 2005 in an effort to slash costs. Rising labour costs are believed to have spurred the planned departure to China.
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