It was just two years ago when the issue of price could make or break a deal for H.H. Chang.
Today, his clients rarely raise the subject. They're more interested in whether Chang, Asia business development manager at Silicon Storage Technology, has sufficient flash memory chips on hand to even complete a sale.
"Price was always a major issue," Chang recalled. "Now, I have customers calling me constantly just to make sure that I have enough [flash memory] product that I'm able to sell to them. Often times, the issue of price isn't even mentioned."
That price considerations have given way to supply concerns in recent years reflects the sweeping changes in the flash memory market.
In particular, the shortage of flash underscores the growing popularity of wireless phones and Internet access devices in a world gone digital.
Between 1996 and 1998, the value of the worldwide flash memory market stagnated at just below US$3 billion per year.
But last year, the market sprung back to life, growing roughly 50 percent to US$4 billion.
And forecasts for this year and next indicate that last year's pick up wasn't just a flash in the pan. Flash memory sales are projected to reach US$5 billion this year and US$6 billion next year.
`non-volatile' memory
Flash memory is non-volatile memory, which means that it continues to retain data even after the power has been shut off. When we flip through our list of saved numbers on our wireless phone, we are accessing flash memory.
Indeed, flash memory can be found in almost any digital device today. Flash stores data in pagers and personal digital assistants; it saves photographs in digital cameras and images in digital camcorders; and its keeps music on hand for playback on MP3 players.
Flash is also found in networking products in addition to so-called "traditional products," such as personal computers.
Silicon Storage, one of the few companies worldwide with flash memory as its sole business, has been one beneficiary of the expanding flash market.
The company's CEO and co-founder, Bing Yeh, was educated at National Taiwan University and then Stanford University before eventually working for Intel.
In 1989, he left Intel and founded Silicon Storage in California. Over the past few years, the company has vastly expanded its product line, multiplied its arsenal of technology patents and brought in key customers such as Acer, Motorola and Sanyo.
Taiwan's key role
Taiwan has become a very important location for Silicon Storage, though it's based in the US. Because it doesn't have any wafer facilities of its own, the company relies on contract foundries such as Taiwan Semiconductor Manufacturing Co (
Locally, the main flash memory makers are Winbond Electronics (
While Winbond is well known as a DRAM company, according to I-Wen Huang, director of Winbond's SRAM/non-volatile memory marketing division, flash memory is also a very important part of the company's business -- second in revenues only to its core business.
Currently, Winbond focuses on the type of flash memory that goes into PC BIOS, producing flash memory in densities up to four-megabytes. Winbond plans to introduce an eight-megabyte flash memory chip in the second half of this year, Huang said.
But while its flash memory technology is a step behind other larger flash players such as Intel and Silicon Storage, Winbond continues to push forward. Huang said Winbond is in the planning stages of developing flash for communications products.
Flash chip shortage forecast to continue
Macronix, which produces flash memory in densities between one-megabyte and sixteen-megabytes, is closer to the heavyweights in terms of technology.
"Macronix's flash products are exposed to a broader range of applications, including digital set top boxes, hand-held games and digital still cameras," said Dan Hyler, semiconductor analyst at Merill Lynch.
Last year, flash memory accounted for 14 percent of Macronix's revenue.
Because non-volatile memory is Macronix's core competency -- and because flash memory is one type of non-volatile memory -- Hyler posits that the company is in a good position to leverage its expertise.
If it does, Macronix will be poised to take advantage of the booming flash market.
Worldwide, almost every major player is planning to increase capacity, a natural response to a surge in product demand and favorable pricing environment.
Industry watchers say conditions will remain positive for the foreseeable future.
"The global shortage in flash memory will persist for quite some time," Hyler said. "Flash has so many applications out there, ones that we haven't even thought of yet."
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