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Slowing MP3 sales to dent flash memory

The flash memory party isn't completely over, but there are signs it is slowing down.

Revenue from flash memory, used inside cell phones and MP3 players, came to $3.1 billion in the third quarter, slightly up from the $3 billion expected by analyst firm iSuppli. However, slowing sales of MP3 players mean that the firm will likely revise its fourth quarter forecast downward soon. The firm had expected a 21 percent sequential sales growth.

With flash, memory makers have to ship a lot of chips just to keep up with price cuts. In the third quarter, the price per megabyte dropped by 22 percent. Sales only remained aloft because megabyte shipments grew by 44 percent.

While revenue was slightly higher than expected for the third quarter, prices have been dropping faster than expected this year. Revenue for NAND flash memory, the stuff inside MP3 players and digital cameras, came to $2.7 billion in the second quarter, up 21 percent from the same period last year but down 15.7 percent from the year before, according to iSuppli.

Among manufacturers, Samsung, the largest NAND maker, saw revenue from NAND drop 11.5 percent from the third quarter the year before while number two Toshiba saw sales increase by 25.6 percent. (Toshiba, in any event, also benefits from Samsung sales. A former Toshiba engineer invented NAND and Toshiba gets royalties from other manufacturers.)