Market analyst firm iSuppli said that the market for NAND flash memory had increased 38 per cent in 2010 and that the market was set to grow in the 'double-digit percentage' in 2011.
However the firm warned that a shift in the market was possible by the end of 2011 with consumer optimising risking "overspending on manufacturing" leading to an oversupply of NAND flash memory. The boom bust cycle lead iSuppli to predict a downturn in 2012.
The analysts issued a warning that aggressive moves to high-tech manufacturing processes could "drive supply well ahead of demand," something the firm called a "dangerous scenario."
Compared to the commodity flash market (USB flash drives and so on), embedded device manufacturers such as mobile phones need stringent testing which can take up to six months the firm said. This creates an incentive for the flash memory manufacturers to shoot for a "rapid ramp-up" in technology and capacity.
"Such a state of affairs could prove destructive, resulting in the significant erosion of average selling prices and plunging the market into chaos," iSupply said.
NAND flash memory manufacturers are, however, unlikely to sit on their hands regarding the development of new flash memory technology.
With sales of mobile flash-memory based devices expected to surge, the last thing any supplier wants is to be the last to move to new technology.