This is excellent news for consumers - we will be able to get twice the capacity or more for cameras, thumb drives, MP3 players etc for the same money by the end of the year.

For SanDisk, the drop in prices is not discouraging expansion plans since there is strong demand from applications such as music and video phones, Vista-enable PCs, solid-state drives (SSDs), video imaging and content applications. While preparing to introduce 56nm production at Toshiba's 12-inch fab (Fab 3) at Yokkaichi, Nagoya, Japan later in the first quarter of 2007, SanDisk will boost the monthly capacity at this plant from 90,000 wafers in the fourth quarter of 2006 to 125,000 by end of 2007.

If prices fall further, solid state hard drive replacements for laptop and desktop systems will start to become viable.