Processors Toolkit

Consumer demand calls for more flash memory

Michael Singer CNET News.com

Published: 22 Nov 2005 15:10 GMT

...Toshiba, Hitachi and Micron have 8-gigabit NAND flash products on the market. (Eight gigabits make up one gigabyte of capacity.)

Beyond Apple, other consumer electronics manufacturers that use NAND flash, such as Sony, SanDisk and Lexar Media, are expected to consume any potential oversupply in high-density Flash now that Intel is joining the fray, Niebel said.

"We're playing with an unknown demand next year and possibly causing a price war with those consumers who are buying cameras, mobile phones and MP3 players," Niebel said. "As Intel begins to realise that these partnerships with Apple and others are integrated in the delivery of digital content, the greater success they will have in building their NAND business."

However, all that demand has created a supply problem for computer electronics manufacturers.

"Right now we have a shortage of NAND on the market and that will carry over to early 2006. We're expecting the rest of the market to be very competitive in their pricing structure to deal with this new joint venture," Niebel said.

NAND availability has been reduced since Apple debuted its flash-based iPod Nano in September and entered a deal to buy as much as 40 percent of Samsung's NAND output in the second half of 2005. Apple's share of global NAND sales in 2006 could reach as high as 25 percent, according to component research firm iSuppli.

"This deal is particularly positive for small- and mid-size NAND buyers, which are finding it extremely difficult to source sufficient quantities of NAND chips at this time," iSuppli said in a newsletter on Monday.

Building NAND flash memory marks a change for Intel, which previously made only NOR flash memory and DRAM. The joint venture will also help Intel with its Multilevel Cell technology, which boosts flash memory density.

As for Micron, the company gains the capital investment needed to increase its NAND market share, a strategy in line with its effort to diversify from its core DRAM business.

Intel and Micron executives said they're confident they can produce more than enough NAND flash because they will use and expand plants in Boise, Idaho; Manassas, Virginia and Lehi, Utah.

"We've been competing with Samsung in the memory space for years. Supply issues are not expected to be a problem," said Micron chief executive Steve Appleton.

Micron, which sold $70m dollars worth of NAND last quarter, said its first collaborative products with Intel should be available in early 2006.

"Overall, it is very positive for Intel, Micron and Apple because of (Intel's capacity to) bring Multilevel Cell technologies to NAND memory, Niebel said.