Prices for the most widely-used flash memory chips in music players, 1 gigabit and 2 gigabit NAND chips, have been on the decline for months. One reason the 1 gigabit parts have been falling in price is that they are reaching the end of their life. The 2 gigabit chips are quickly becoming the most popular NAND chips in the industry.

Increase production from chip makers have also helped saturate the market, weighing down prices.

The 2 gigabit flash memory chips are currently priced at around $11 each, compared to $18 in the first quarter of the year, according to Merrill Lynch. The financial services firm predicts that the chips will fall another 31 percent in price between July and September, and more later in the year.

"The price decline has just started. Who knows when it will stop?" says Sun Chung, a memory chip analyst at Nomura Securities in Seoul.

The window of opportunity to benefit from the cheap flash prices may be small, however. When chip makers start to feel the pain from lower prices they will likely slow production to avoid losses, pushing prices higher again.

By: DocMemory
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