In the fourth quarter M-Systems Flash Disk Pioneers (Nasdaq:FLSH) announced entry into the cellular market through the development of a Flash chip for a big customer. TheMarker has learned that the customer is Finnish communications equipment giant Nokia (NYSE:NOK).

Market sources estimate that M-Systems has allied with Nokia to develop its mobile DiskOnChip, which increases memory capacity available today on cellular phones. M-Systems declined to comment.

M-Systems is currently negotiating with Motorola (NYSE:MOT) and Ericsson (Nasdaq:ERICY) in the hope of their acquiring the product. It is also at various stages of negotiations with Samsung, Panasonic, Qualcomm (Nasdaq:QCOM), LG TeleCom, Kyocera Wireless Corporation, and others.

Winning these contracts will lead to massive demand for M-Systems mobile DiskOnChip and sales in the second half of 2002.

M-Systems has in the past said that they attribute very high importance to an alliance with the big customer because it believes that customer's choice of the M-Systems product will influence other customers.

It is thus possible that following the Nokia alliance, it will be easier for M-Systems to close deals with other companies.

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