Horrible conditions in the NAND flash market have seen Micron Technology's shares sink to their lowest level for 15 years, and Toshiba and SanDisk, take losses, but 3-bit-per-cell and 4-bit-per-cell flash from Toshiba/SanDisk could give them the edge in the market.

"We expect more than 20 per cent (of total bit output) on 3-bits per cell by the end of 2008", said Sanjay Mehrotra, president and COO of SanDisk, "in 2009, we expect approximately 50 per cent of our fab output to be 3-bits per cell. We are making good progress on 4-bits per cell development and we expect to introduce initial products with this technology in the first-half of 2009, well ahead of the competition."

The disadvantage of 3-bit-per-cell is that it increases the write speed by 50 per cent over 2-bits-per-cell, and 4-bits-per-cell is expected to double the write speed over 2-bits-per-cell.

The advantage is that each extra bit added to the cell cuts cost by 50 per cent, so the 3 and 4 bit-per-cell products will give the Toshiba/SanDisk combination a significant competitive advantage over the Intel/Micron combination.

In the immediate future, the expectation for the NAND market is that NAND producers will cut prices ruthlessly to force competitors out of the business.

This will put tremendous pressure on Intel, which has promised to stop the financial bleeding at its NAND joint venture with Micron, called IM Flash. IM Flash has already announced curtailments to its expansion plans, and the next moves could be Intel trying to limit its exposure to the NAND market by reducing, or disposing of, its stake in IM Flash.

Micron, Intel's partner, may be able to buy Intel's share, but its current share price of $4.55, which is the lowest the company's shares have been since 1993, doesn't give it much scope to use its shares to fund such a deal, or to raise money using its stock as security. This year Micron's shares have slid 30 per cent.

The misery of NAND market conditions is reflected in SanDisk shipping 120 per cent more bits in Q2 than it shipped in Q2 last year, but for prices which were 55 per cent less than a year ago. According to Toshiba, NAND prices fell 20 per cent in Q208 compared to Q108.

Toshiba vp Fumio Muraoka said: "Demand-supply is skewed in such a way as to drive down prices.''

"Flash inventories remain excessive and pricing and margins will therefore remain under pressure until supply and demand come into balance," said Eli Harari, SanDisk's chairman and CEO.

See also: Mannerisms, the blog of David Manners. Updated twice daily, it's the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows. Sign up for the Mannerisms eNewsletter.