Strong demand for digital cameras and an unexpected surge in
sales of new removable storage devices for personal computers
have led to a shortage of removable flash memory, analysts said.
Consumers should not expect to see prices rise, but the shortage
could keep equipment makers from lowering prices or adding new
features, they said.
Samsung and Toshiba, the top supplier of NAND chips, the flash
memory used in removable storage devices, have faced a surge in
demand, Handy and others said.
NAND is used in cards for storing things like digital photos in
cameras that can be removed from devices and plugged into a PC
for downloading images, as well as in small keychain-size USB
drives used for manually transferring stored data from one
computer to another.
Handset makers are also starting to add removable storage flash
cards to cellphones used in Japan and Korea, he added.
The news is good for SanDisk, the world's largest supplier of
flash memory storage cards. SanDisk reported record product
revenues in the third quarter as a result of what it called the
"industry-wide NAND flash memory capacity shortages". The
company's stock price has tripled since the beginning of the
The shortage could mean lower gross margins for smaller flash
memory device makers, according to Satya Chillara, an analyst at
WR Hambrecht & Co. "The second-tier guys are paying higher prices
because they can't get capacity," he said.
The NAND shortage is not expected to ease until mid-2004 or even
the end of 2004, after STMicroelectronics and Hynix Semiconductor
get their initial flash chips into the market, said Betsy Van
Hees, a principal analyst at market research firm iSuppli.
The total flash memory market is forecast to grow 42% in 2003 and
36% next year, Van Hees said.
Meanwhile, supply for NOR flash memory, used predominantly in
cellphones, is tightening but not at a shortage yet, analysts
Multi-function cellular phones, such as camera phones, are
driving the demand for NOR chips, according to Van Hees.
While spokesmen at NOR flash suppliers Intel and Advanced Micro
Devices declined to go into much detail, they confirmed that
demand was strong and prices were firming up.