Prices for Intel's flash memory chips, a vital component in mobile phones, will rise between 20 and 40 per cent on January 1, an Intel spokeswoman said yesterday.
Intel is informing its customers of the price increases. Any long-term pricing agreements will remain intact, the spokeswoman said.
The basic economic principle of supply and demand is at work in the flash memory market, she said. "This is a good indicator of industry growth, especially in mobile phones, which have higher density requirements."
Advances in flash memory density will lead to increased prices over the next few years, said senior vice president and general manager Ron Smith during an Intel Wireless Communications and Computing Group conference call last week.
Flash memory allows devices to store data without a constant electrical current, making it ideal for small devices such as mobile phones and personal digital assistants. As demand for mobile phones has continued to increase, flash memory manufacturers such as Intel and rival Advanced Micro Devices are poised to capitalise on the growing market for the technology.
AMD predicted a strong fourth quarter in its flash memory business based on growth of high-end phones during its analyst call last month.
Sales of mobile phones are rising as new models with colour screens and Internet capability hit store shelves in time for the upcoming holiday season. Strong third-quarter sales of mobile phones caused market researcher Dataquest to ramp up its prediction for full-year 2002 sales in a report released on Tuesday.
More memory is required to run the colour graphics and games found on some of the newer models, which is satisfied by denser memory modules that can fit more memory into a similar space. Mobile phone manufacturers can purchase different packages of flash memory from Intel or AMD depending on the requirements of their phones.