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Flash memory is suffering a sharp price drop that has sent the spot price of Samsung Electronics¡¯ flagship 2.4 GB chip plummeting more than 30 percent since the end of last year. Flash memory chips, unlike DRAM (dynamic random access memory), can retain data after the power is shut off.
Supplies are increasing while demand declines. Apple has dramatically reduced orders for NAND Flash chips it uses in its iPod MP3 player, reportedly cutting the number from 2.5 million a month in the first quarter last year to 1.5 million in recent months. Apple is using 30 GB and 60 GB hard disk drives instead of Flash memory for storage in its most recent iPod with its more advanced video player function.
What¡¯s more, Japan¡¯s Sony has also reportedly plumbed for hard disks rather than Flash memory for its Playstation Portable, which many expected to be a new source of demand. The product requires large amounts of storage for its new music and video player functions, and for bigger memory capacity hard disks are still cheaper.
Microsoft¡¯s game console X-box 360, which was released at the end of last year, also uses a hard disk as its main memory storage. An industry insider says Samsung Electronics walked out of negotiations when Sony demanded a 35 percent discount for Flash memory chips.
Supply, meanwhile, is expected to grow. Intel and Micron Technologies have entered a partnership to make Flash memory chips, and Japan¡¯s Toshiba decided to double production. Samsung Electronics and Hynix Semiconductor, too, will boost production by increasing yield and reducing unit costs.
An added difficulty for Korean chipmakers is the falling U.S. dollar against the won, which is pushing export prices up. Unless big buyers like Apple last year come through, there will be more trouble for Korean chipmakers, JP Morgan Securities predicts. Samsung Electronics¡¯ stock price has fallen 12.8 percent from W740,000 (US$740) on Jan. 31 to W656,000 on Feb. 16.
(englishnews@chosun.com )
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