Intel Corp (INTC)

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Remember Lowly Memory Chips? (Intel looking at NAND Flash)
They're Back, Changing Industries

By EVAN RAMSTAD and DON CLARK
Staff Reporters of THE WALL STREET JOURNAL
September 30, 2005; Page A1

The falling cost and rising capacity of a popular memory chip are triggering a shake-up in the global electronics market.

The chip, perhaps best known from the memory cards in digital cameras, uses something called NAND flash memory to store data, songs, photos and lately video in a tiny sliver of silicon. Major advances in the chip's technology have giant electronics companies jockeying for position as suppliers of NAND chips are scrambling to protect other product lines from the competition.

For some companies, including South Korea's Samsung Electronics Co. and Toshiba Corp. of Japan, surging sales of NAND chips and the products they power are already proving a huge boon. Thanks to an early bet on the chip's potential, Samsung -- the world's No. 2 semiconductor maker by revenue from chip sales -- is closing the gap on industry leader Intel Corp.

Intel, which makes microprocessors that act as the brains of computers, also produces a different kind of flash chip called NOR that runs software in cellphones and other products. But company executives acknowledge that surging demand has led them to consider making NAND, too.

The new-style memory chips are suddenly one of the most important factors behind the surprising size, capacity and general coolness factor of the hottest consumer gadgets finding their way into electronics stores, from ultra-small camcorders and portable video players to Apple Computer Inc.'s iPod nano. In coming years, the rate that such products fall in price will be driven in part by the speed with which NAND-chip prices fall.


"Flash is going to be huge in the next five years," says Sean Maloney, executive vice president and general manager of Intel's mobility group.

NAND chips now account for about 5% of the $200 billion-a-year semiconductor business. But the $10 billion in sales forecast for this year is five times as high as the 2002 level, and revenue is up 45% so far this year, compared with projections for single-digit percentage growth in the overall chip industry.

.....wsj