A massive decline in the price of flash memory, the chips that store photos in digital cameras and music in iPods, is prompting innovation among companies trying to increase sales.

A few of the items users are likely to see more widespread in gadgets this year include greatly expanded storage capacity in SD (secure digital) cards, USB (universal serial bus) flash sticks and internal storage, as well as new, lower-cost SSDs (solid-state discs) in notebook computers, such as the MacBook Air.

The price of mainstream 4Gbit SLC (single-level cell) flash memory chips has fallen 73 per cent since mid-August to $4.96 late Thursday, according to DRAMeXchange Technology, which runs an online clearinghouse for the chips. The chips hit a high of $18.50 on 14 Aug. The price of 4G bit MLC (multi-level cell) NAND flash chips have taken a slightly worse dive, 75 per cent down to $2.23 on Thursday, compared to its summer high of $8.85 per chip.

The difference between SLC and MLC is cost and life span. SLC normally costs about three times more than MLC, and has a lifetime of 100,000 write cycles. MLC has a lifetime of only 10,000 write cycles.

Toshiba and Samsung have both developed new 128GB SSDs based in MLC NAND to expand their use in notebooks. The new SSDs are less expensive, giving notebook PC designers more choices in storage.

"At 128GB, you're giving consumers the kind of storage space they expect in a notebook," said Jim Elliott, director of flash marketing at Samsung, in an interview.

To work around the lifespan issue, Toshiba and Samsung use controller chips to spread writes across the drive to avoid wearing out any one portion too quickly.

The new MLC-based drives are an important step forward for SSDs in the battle against hard disk drives (HDD). At 128G B, an SSD stands are far better chance of replacing an HDD in laptop computers because it removes some of the high-capacity advantage HDDs hold.

SSDs have several advantages over HDDs; they're lighter, more rugged, consume less power, make no noise and enable a computer to start up and load software faster than HDDs. But SSDs are a lot more expensive than HDDs, which is why they're mainly used in the business laptop market, where users are willing to pay more for performance and reliability.

Elliott believes SSDs for PCs will account for 27 perc ent of NAND consumption by 2011, particularly in business laptops and mobile devices.

SanDisk has taken a slightly different route in SSDs than Toshiba and Samsung. The company made a 72GB SSD in a thinner form factor aimed at mobile devices. The drive takes up less space, so it could be used in a range of mobile devices, said Iri Trashanski, director of strategic business development at SanDisk.

He doesn't believe there will be a market for 128GB SSDs for a while.

Brian Kumagi, senior business development manager flash memory business at Toshiba, believes the lower cost of MLC NAND chips will play a major role in seeing 128GB SSDs gain market share.

Toshiba is also offering MLC NAND SSDs in 32GB and 64GB capacities to entice laptop PC makers and makers of digital music players and other devices requiring more storage.

There are several other products where companies are adding NAND flash to increase storage capacity and improve devices. One, thanks to the iPhone, is handsets, said Elliott.

Multimedia handsets will likely see 8GB of embedded flash memory become the standard this year, and card slots are being added to a host of mobile phones to increase storage and for added content delivery, including movies, games, software and more.

Plus, low prices are encouraging new innovation, just as low NAND prices helped put the chips into more iPods earlier this decade. One area is in video cameras, namely, Flip video and similar devices.

For $119.99, users can buy a Flip video camcorder that uses flash memory to store 30 minutes of recordings.

In addition, devices such as GPS (global positioning system) for cars will need more flash when 3D (three dimensional) digital maps start replacing 2D maps.

The good news for users is that there are so many flash memory makers in the world today that prices will remain low or at least reasonable for a long time.

In a report titled "Flash to crash," Macquarie Securities chip analyst Warren Lau wrote that flash memory prices will likely remain low throughout the first half of this year, with little room for upside until the third quarter.

"We continue to warn that flash will see excess supply in the first half of 2008 owing to aggressive production ramp (at IM Flash and Toshiba) and the seasonally weaker period for consumer products (digital still cameras, handsets and MP3)," he wrote.

Much of the possible price movements in NAND flash actually depend on Apple because of the widespread popularity of the iPod and iPhone.

The company announced it has already shipped over 4 million iPhones and continues to ramp shipments. iPod shipment growth has dropped a bit, according to market researcher Gartner, but higher capacity iPod products such as the Touch have done well in the market.

"Apple is a critical driver of flash consumption and will continue to yield great influence on flash vendors," Gartner said in a report on Monday.