27th May 2003

Rarely is flash memory as volatile or susceptible to market fluctuations as the traditional markets have historically been.  At least that's how it used to be, can this week be the sign of things to come?

Flash memory, or NAND flash, primarily manufactured by Samsung in Korea is in short supply with many factories expecting a shortage for the next 7 to 10 days.  Mittoni Pty Ltd has it's CompactFlash assembled using Samsung NAND and IC controllers by KTC.  For the first time in quite some while our assembly factories do not have enough NAND to build CF cards in capacities of 256MB and 512MB, and our 1GB cards are limited to just 150 cards.  And ever factory we speak to has the same message.

Were not the only OEM assemblers experiencing difficulty with Flash Memory product supply at present.  Secure Digital cards, and particularly those by Lexar Media, are presently extremely difficult to source (and Lexar 40x CF cards even more so unless you wish to pay a premium).  Our customers who require high-performance Lexar SD (particularly PDA users), have experienced a wait of almost two weeks for 256MB Secure Digital.

Perhaps the reason of supply and demand inbalance goes further in this instance.  Approximately two weeks ago at the beginning of May we experienced a dramatic drop in NAND flash Memory ICs.  Our CompactFlash card prices nearly halved during this time, coupled with a stronger Australian Dollar.  So why are our prices so low?  That's why, the NAND price just fell through the floor and it wasn't due to over supply, but a fundamental improvement in production and unit costs.

With more and more digital peripherals using Flash Memory as a storage media, we expect this market to grow significantly through the end of 2003 and beyond.  Movie cameras will no longer use lossy magnetic tape, but rather 4GB, 16GB and 32GB CompactFlash are on the horizon.  In twelve to twenty-four months we will be going through the same exponential doubling in card capacities -- we will no longer be referring to 64MB CompactFlash, but rather 64GB.  Will NAND become the next commodity storage component, increased speeds at least part the way toward DDR RAM and a much larger market will assist to support this this trend.