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May 25, 2004 BULLETIN

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Flash Memory Market Forecast Remains On Track

But unit shipments much stronger, ASP much weaker

The flash memory market will remain one of the brightest segments of the IC Industry in 2004.  In terms of dollars, the flash market grew only 2 percent in 1Q04/4Q03, matching IC Insights’ January forecast.  For the balance of the year, IC Insights believes the flash market will show sequential quarterly market growth of 5 percent, 9 percent, and 6 percent, resulting in 45 percent annual growth for 2004 (Figure 1), slightly lower than our original January forecast of 48 percent.

Figure 1

While flash market growth remains on track, flash memory unit shipments are showing a much stronger annual growth rate than originally forecast.  In 1Q04, flash shipments increased 11 percent, compared to 4Q03.  Applying IC Insights’ forecasted quarterly flash shipment growth rates of 8 percent, 8 percent, and 10 percent through the rest of 2004 results in overall flash unit shipments exhibiting a 46 percent growth rate over 2003, well above IC Insights’ original forecast of 35 percent unit shipment growth.  Ongoing strength across many applications in the consumer (digital cameras, etc.) communication (cell phones, etc.), and computing fields has kept demand for flash memory very robust through the first five months of the year.

The only “soft spot” in the flash market is average selling prices.  IC Insights originally forecasted the overall flash memory ASP to be $5.38 in 1Q04.  Actual flash ASP in 1Q04 was only $4.86.  With a collection of new flash competitors including Infineon and Hynix/STMicroelectronics entering the market and bringing more capacity with them, pricing pressure on flash components is forecast to continue through the end of 2004.

IC Insights will further investigate and report on changes to flash memory supply and demand and review all segments of the IC market in its Mid-Year Update to The McClean Report, slated for release in July 2004.

About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the integrated circuit industry. Founded in 1997, IC Insights offers coverage of global economic trends, IC market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of emerging markets for ICs.

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