The price of NAND flash memory chips will fall 40 to 50 percent over the next fiscal year, Toshiba CEO Atsutoshi Nishida told reporters.

The Japanese company reported its NAND prices already dropped 45 percent in a period from April to September and expects profits to fall 60 percent in March 2009.  The NAND price drop forced Toshiba to post an operating loss of 30 billion yen, which was its first operating loss since 2003.

"We expect the drop in NAND prices, which has been steep and unexpected, to continue over the next year," Nishida said in an interview with Reuters. 

NAND flash is commonly used in mobile phones, digital cameras and other popular portable electronics.  Lower cost digital cameras and MP3 players have greatly helped increase the global demand for the memory chips.

Samsung, Hynix Semiconductor and other companies with a heavy reliance on creating NAND flash technology will also begin to lose revenue due to the lower delivery price.

To combat falling prices, Toshiba is making a transition from 56 nanometer flash chips down to 43 nanometer, Nishida said.  The company plans to have 50 percent of memory production shifted from 56 to 43 nanometer by next month, with 90 percent transition completed in March 2009.

In global sales, Toshiba is the second largest NAND flash memory maker, trailing behind Samsung.

Last month, Samsung offered $5.85 billion cash to try and purchase SanDisk, a company known for flash memory cards.  The deal was rejected by the SanDisk executive board and has been closely watched by the U.S. government, as there are monopoly concerns because Samsung would own majority of the NAND flash memory market.

Since the takeover by Samsung seems unlikely at the moment, Toshiba has been said to be another company possibly interested in a SanDisk takeover.