Chip firms should brace for a slump in the price of memory chips used in small devices, Hynix has warned.
The chipmaker says it expects the price of Nand chips, used in digital cameras and music players, to drop 25% in the first quarter of 2006.
Amid an over-supplied market, Hynix said it still expected Nand chip prices to halve during 2006 as a whole.
South Korean-based Hynix said the first quarter drop in prices had been "sharper than expected".
It had earlier predicted a 20% dip for the three months to 31 March.
'Strong margins'
Analysts said they expected the market to stabilise towards the summer.
"Nand prices will remain weak until the second quarter at least," said Park Young-joo, an analyst at Woori Investment and Securities.
Mr Park added that despite the falling prices, "Hynix still enjoys strong margins from Nand chips and may continue to pour in supply".
The market for Nand flash memory, which has been driven by devices such as Apple's iPod Nano, grew 65% to $10.9bn (£6.2bn) in 2005, according to industry estimates.
Hynix is the number three player in the sector with a 16.8% market share.
Market leader Samsung holds 50.4% and second-placed Toshiba has 19%.
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