Flash memory prices tanking?

Prices on the flash memory used in portable devices have plummeted in the past month, according to a report by DRAMeXchange. The Taiwan-area research firm says that a combination of economic inflation, the Sichuan earthquake in mainland China, and a seasonal lack of orders in spring have forced companies producing NAND flash to drop their prices by about 20 percent between June and July in order to clear overstock and is only expected to get worse. As the usual recovery isn't expected to be as strong, the problem could last until at least the end of the summer, the researchers say.

The overproduction threatens to leave manufacturers with about 149 percent more overall memory on-hand than they did in 2007, preventing them from charging an ideal rate.

While damaging to the companies, the imbalance should prove advantageous to companies producing cellphones, MP3 players, and other portable devices, as it lets them buy up either larger-capacity chips than expected or the same chips at a discount that lets them collect more profit or cut the final sales price.

Earlier price drops are already known to be beneficial for some companies. Creative earlier today introduced the ZEN Mozaic with a 4GB version priced at about $95 US, or between $30 to $50 less than devices launched less than a year ago.

Apple is often considered one of the largest flash purchasers in the world due to the spread of the iPhone and iPod, and is most often cited as the cause for price drops like these as well as shortages should it order more than anticipated. The California company is commonly understood to be preparing its annual iPod refresh for late summer and should use memory price drops over the past several months to increase the storage of its players.

Filed under: iPod, iPhone, industry, Apple
Other story tags: Creative, ZEN