Chipmakers Agree on Flash Memory Shortage

SAN MATEO (05/21/2000) - Intel Corp. the sale of its 1billionth flash memory chip this week amid concerns that a flash memory shortage has arrived.

Intel officials on Monday will present a "state of flash memory address," according to company representative David Dickstein of the Graphics and Flash Division. The message should reinforce industrywide warnings of mass shortages of both low-and high-density flash memory used in cell phones, routers, MP3 players, digital cameras, and set-top boxes.

All major flash memory players, including Intel, have admitted that skyrocketing demand for products requiring flash memory will keep production below capacity until 2002, with the nadir occurring sometime near the end of this year.

As a result of the flash memory shortage, customers looking to buy flash memory-enabled devices can expect higher prices and lag times as long as four months in getting new flash memory to market, according to Brian Kumagai, the business development manager for low-power SRAM (static RAM) and NOR flash at Toshiba.

"We're definitely seeing an increase in pricing, and the shortage is driving that," Kumagai said. "I believe we are anticipating another two years of this shortage."

Aligning its existing flash memory inventory for a select group of customers finds Toshiba turning away many would-be flash customers. "Obviously, we can't support everyone who asks for support," Kumagai said.

Determined to weather the shortage, flash memory users, particularly cell phone manufacturers, are broadening their product designs to incorporate Toshiba, Intel, or Advanced Micro Devices (AMD) flash memory. This way, they can choose from whatever flash memory is available in the dwindling market, Kumagai said.

Intel has already sold all flash memory inventory through the rest of 2000. To offset the shortage, Dickstein said, Intel will institute a new flash memory fabrication plant every quarter.

Flash partners AMD and Fujitsu occupy 30 percent of the total flash memory market, according to Kevin Plouse, vice president of technical marketing and business development for AMD's Memory Group. To minimize the impact of the flash shortage, AMD and Fujitsu will ramp up extra manufacturing capacity in foundries owned by the two companies.

"If things continue the way they are going we may never catch up [with demand]," Plouse said.

To illustrate how quickly production of flash memory has grown, it took 12 years for Intel to reach the "1 billionth sold" mark, but it will take less than two years for Intel to double that figure, Dickstein said.

Intel Corp., in Santa Clara, California, is at www.intel.com. Toshiba America Information Systems Inc., in Irvine, California, is at www.toshiba.com.

Advanced Micro Devices Inc., in Sunnyvale, California, is at www.amd.com.

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