Flash Memory Prices Slump as Market Showdown Looms
May 25, 2004
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Two companies that dominate the lucrative market for memory chips used in digital cameras and music players are slashing prices to stoke demand and undermine emerging rivals, industry officials and analysts said.

The move by Samsung Electronics Co. Ltd. (Seoul, South Korea) and Toshiba Corp. (San Francisco, CA, U.S.) is a bonanza for consumers snapping up flash memory devices in increasing numbers and sets the stage for a fierce battle in the most profitable part of the memory industry.

Samsung said the cuts, which have more than halved prices for some flash chips since October, are a long-planned effort to grow the market.

But industry experts said Samsung and Japan's Toshiba are taking a pre-emptive strike against companies including Infineon Technologies AG, Hynix Semiconductor Inc., and Micron Technology Inc that are trying to break the virtual duopoly.

"We are beginning to see the oligopoly between Toshiba and Samsung hang on to the last stages of its life, and I'm sure they will want to maximize it while they can," Eric Stang, the chief executive of Lexar Media Inc, told a conference last week.

Flash chips do not need power to retain their data, unlike memory chips in computers, and so are ideal for removable storage like the memory cards made by Lexar. The market has boomed along with sales of digital cameras and keychain-size USB drives for transferring data between computers.

Samsung and Toshiba together control about 90 percent of the U.S. $4.7 billion market for a type of flash known as NAND and analysts expect sales to grow to $16 billion by 2007. (Reuters)

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