Flash Likely to Get More Expensive; Samsung Builds 10nm Fab

There are more signs of supply constraints in the flash memory market, which could lead to price increases. Following Toshiba's announcement that it would cut flash memory production by 30 percent, we have seen companies that rely on these chips warn of demand exceeding supply.

For chip makers such as Toshiba, that may be good news, but the product chain is likely to see higher prices. Among the companies that warned of revenue shortfall due to supply constraints are OCZ as well as Sandisk. OCZ said that it had record orders, but was not able to meet the demand because of flash shortage, according to Seeking Alpha. The publication noted that Samsung, the world's largest flash chip maker "indicated its intention to convert to the production of logic products from memory chips at its Austin, Texas facility."

Add to that the fact that Apple has largely secured first dibs on flash memory from all major manufacturers, and a greater than expected success of the iPhone 5 could make the current constraint situation even more serious.

On the brighter side, Samsung is reportedly preparing the construction of a fab in Xi'an, China, which will be dedicated to 10 nm flash chips initially. At a cost of $7 billion, the factory will be built in two phases and have floor space of 10.8 million square feet - the equivalent of about 187 football fields. The factory is scheduled to go online in 2014 with an initial floor space area of almost 5 million square feet. The Xi'an is home to a total of 37 universities and more than 3,000 IT R&D facilities.

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