SanDisk's CEO says that the rising costs associated with research and development of modern memory chip factories is making manufacturers hesitant about adding new capacity -- and the knock-on effect is strong prices.
As reported by Reuters, CEO Sanjay Mehrotra told analysts at a conference on Wednesday that even though demand has grown for flash memory, chipmakers strapped for cash and thinking twice about investing in new facilities are adding little new capacity to cater for increasing demand.
Flash memory chips are used in mobile devices including smartphones and tablets, as well as solid-state drives and specific camera models. A main goal of NAND flash memory chip research and development is to try and reduce the cost per bit and increase storage capacities in order to compete with traditional hard drives.
Last year, an industry slump caused memory chip prices to fall, although this year manufacturers have seen slow recovery.
"We are in for an extended period of stability with respect to flash fundamentals. This will then have an impact in terms of providing a favorable pricing environment for the flash industry," Mehrotra said.
The SanDisk CEO believes that chipmakers including Samsung will increase their NAND flash manufacturing capacity by an average of seven percent this year, although his firm will add less new supply than rival companies. In addition, Mehrotra predicts that in 2014, additions next year will remain moderate as the cost associated with adding new product lines, capacity and research remains high.
Photo credit: Rupert Goodwins