Flash, bang, wallop -– what a memory shortage

Mobile phone and handheld computer production is being held-up as Flash memory chip suppliers fail to keep up with demand. Benny Ginman, a director of Intel Europe, said the vendor was still able to meet its production commitments, but that was "not in a very good position" to take on extra orders. According to the Financial Times, mobile handset makers, including Alcatel, said production was being limited by the shortages. Alcatel said it could have sold more GSM handsets this year had chips not been in such short supply. Nokia and Ericsson maintained they had enough chips for production this year. Intel estimated that worldwide demand for Flash memory chips soared from 160 million units in last year's fourth quarter to 240 million in the latest period. Meanwhile, AMD has sold out of Flash memory chips. Sales are expected to rocket to $3.24 billion in 1999 from $2.49 billion last year. IC Insights, a chip market research group, predicts this revenue to reach $4 billion in 2000. Joe D'Elia, senior microprocessor analyst at Dataquest Europe, said: "Mobile phone growth keeps outgrowing all predictions. This shortfall of Flash memory chips is likely to get worse before it gets better." According to D'Elia, it is a serious threat. He said Flash memory chips had a similar history to that of DRAM memory chips. "Flash went through an equally dramatic drop in price, so people didn't invest in production capacity. "They've now been caught short." D'Elia said it was unlikely that end users would see a shortage of handsets in general because other manufacturers would step in to expand the market. "But customers may not be able to get their preferred brand 'X' handset with the services they require, such as GSM," he warned. "Some manufacturers haven't seen this shortage coming." ®