Flash memory chip sales for popular consumer devices such as the iPod saved the DRAM (dynamic RAM) industry from a major collapse last year, market researcher Gartner Dataquest said Monday.

DRAM makers such as Samsung and Hynix Semiconductor would have faced falling prices and massive over-production had it not been for the popularity of flash memory. DRAM production lines require minimal fine tuning to switch to NAND flash from DRAM and back, giving DRAM makers a choice of which product to make.

Memory industry saved from collapse

The popularity of digital music, photos and other data on consumer electronic devices created the need for flash, which boasts good data storage capacity, a low price and use in a range of gadgets. And the popularity of flash was what kept companies from over producing DRAM last year, according to Gartner.

"It's very clear, NAND flash saved the DRAM industry from a major collapse," said Andrew Norwood, research vice president at Gartner, in a statement. "2005 was not a good year for the DRAM industry, but it could have been a lot worse," he added.

The DRAM industry normally runs in a boom-bust cycle because cutthroat competition among makers causes them to invest heavily in new factories in order to gain market share. The investment often overshoots what's needed and causes a glut. Over the past several years, the industry has faced more gluts than good times, which reduces prices for users in the short term but could damage the industry over the long term.

By the numbers...

Last year, DRAM skimmed by with a slight year-on-year decline in overall market revenue. Worldwide DRAM revenue declined 5 per cent to $25 billion last year, from $26.3 billion in 2004, according to preliminary estimates from Gartner. It was the first contraction of DRAM industry revenue since 2001, when revenue declined a massive 63.2 per cent.

Samsung took first place in the DRAM industry with a 32.1 per cent share of the market, followed by Hynix at 16.4 per cent, Gartner said. US chip maker Micron Technology grabbed third place with a 15.5 per cent share of the market, while Germany's Infineon Technologies hit 12.7 per cent and Japan's Elpida Memory was fifth with 7.1 per cent.

Taiwanese companies rounded out most of the remaining top ten, with Nanya Technology at number six and the top performer in terms of year-on-year growth. Nanya took a 5.8 per cent global market share last year, as its sales increased 21.4 per cent over the previous year.