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Samsung Electronics, the world’s largest NAND flash maker, plans to drop its prices for NAND flash by up to 30% in the second half of this year, raising the barrier for new entrants in the market, according to a company source.

The source said that Samsung currently quotes 1Gbit NAND flash at US$20-21 per chip and it may drop prices to US$16-17 in the second half. The low price strategy will affect worldwide spot prices.

NAND flash spot prices have been dropping since January of this year due to seasonal factors, according to DRAMeXchange.

Although the move will hurt Samsung’s profitability, the source indicated that Samsung could still enjoy over 50% gross margins on the product, claiming that the company’s costs-per-chip for the 1Gbit part are at US$10.

Rising competition

Booming demand for consumer electronics will boost worldwide NAND flash sales to US$11.5 billion in 2006, said research firm iSuppli in December. However, competition in this fast growing market is set to explode as new entrants gear up their mass production schedules.

Samsung held the number one spot with 54.3% of the US$3.8 billion global NAND flash market last year. The number two vendor, Japan’s Toshiba, announced on April 13 that it will build a 12-inch fab with US-based SanDisk for NAND flash production.

Japan’s Renesas Technology offers chips called AG-AND, which is similar to NAND. With the help of its outsourcing partner Taiwan’s Powerchip Semiconductor Corporation (PSC), the company hopes to boost its output, in terms of capacity, sixfold in two years and grasp 15% global market, said an April 13 Reuters report.

Infineon Technologies launched its 512Mb parts at the beginning of this year. The company will broaden its portfolio to include 2Gbit parts by 2005.

Hynix Semiconductor is shipping 0.12-micron-based 512Mbit parts, 90nm 1Gbit and 2Gbit parts set for production in the fourth quarter. Its technology partner STMicroelectronics began producing 512Mbit and 1Gbit parts last month.

Samsung debuted its 90nm-based 2Gbit NAND flash early this month and it plans to double its flash capacity this year, said Tom Quinn, vice president of memory sales and marking for Samsung US, according to an April 1 Silicon Strategies report.

http://www.digitimes.com/NewsShow/Ar...ages=A4&seq=13

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