Sony Could Stoke Flash Fire

Representatives from Sony and Samsung were unavailable for comment.

In addition to MP3 players, flash chips are used to store data in digital cameras and cell phones. Executives at many chip companies expect flash to increasingly make its way into notebook PCs as well. According to recent report by the Semiconductor Industry Association, sales of NAND flash jumped 79% year over year in October. Sales of NOR, a less popular type of flash memory, were down 5% from last October.

A number of chipmakers are ramping up plans to increase their presence in the market for NAND flash memory, which commands higher margins than other types of computer memory, such as DRAM. Spansion(SPSN), the recently spun-off joint venture between Advanced Micro Devices(AMD) and Fujitsu, plans to roll out a new type of flash memory next year that will provide the operation an entree into the booming NAND business.

With so many semiconductor companies moving into the flash market, some analysts and investors have worried that a supply glut could lead to a decline in prices similar to that which has plagued the DRAM memory business. Last week, Micron noted that DRAM prices fell 15% in its most recently completed quarter.

But pre-orders by companies like Apple, and potentially Sony, suggest that even with the increasing output of flash chips slated to hit the market, consumer electronic companies expect supplies to remain tight for the foreseeable future -- a situation that could help keep flash prices stable.

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