The market for Flash memory will be worth more than $17bn next year, according to analysts in Korea, the world's main Flash production centre.

Sales will be driven by the launch of memory-hungry gadgets like Apple's 16GB iPod, a second generation of Microsoft's Ultra Mobile PC and music phones. 

The market for the most commonly used Flash memory type, Nand Flash, is growing some 27 per cent per annum, and is expected to reach $13.5bn this year and $17.1bn in 2007.

"Amid stabilising DRam prices, the Nand Flash memory market is recovering," said Michael Hoosik Min, an analyst at Korea Investment and Securities. 

"We recommend investors to focus on the second half of the year, the high season, and the market's growth rate until 2007."

Korea's Samsung Electronics dominates the market at 50 per cent in revenue terms, followed by Toshiba and Hynix with 17 per cent each. 

Media players and digital cameras each take up approximately one third of Flash production, according to data from IDC. Handsets and USB drives both account for approximately 10 per cent.

Despite increased competition, very high demand from manufacturers of low-power portable devices means that the Flash market is still growing much faster than the market for traditional DRam memory chips.

"The memory semiconductor industry is on an upward track with a 2005 to 2007 compound annual growth rate of 21 per cent. The Nand Flash memory market should grow at an annual average of 27 per cent," said Min.

Successive waves of Flash products are creating niches for new products which exploit the technology as chip prices fall.

Low Flash memory prices are now stimulating manufacturers to develop imaginative new portable gadgets, Min believes.

These include notebook PCs which use Flash memory in place of hard disk drives to increase response speed and reduce power consumption.

The precise shape of the market over the next six months will be strongly influenced by Apple's forthcoming new media player products, such as 8GB and 16GB Flash-based iPods.

A possible short-term Flash shortage, and related price hikes around the end of the year, depends largely on Apple's plans.

"We expect Apple to showcase its new model in September or October, given contracts with its component providers. Product development is in full swing targeting the October to December high demand season," said Min.

By: DocMemory
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