Samsung Electronics is seeking to extend its dominance of the memory market to flash (SmartMedia) but it has made little progress so far as a supplier of that technology for hot MP3 audio players.

Instead, Samsung has met stiff competition from U.S. flash-memory-card maker SanDisk Corp. (Sunnyvale, Calif.). So far, companies like LG Electronics, Saehan, Digital Way and Koryo Media that are developing MP3 players or secondary models have adopted SanDisk's 32-Mbyte multimedia card for their designs.

For example, SanDisk announced last month that LG Electronics would bundle the SanDisk flash card with its portable MP3 audio players. "Our strategy is to go where the market is," said Nelson Chan, SanDisk's vice president of marketing. Korea "is a hotbed for MP3 player design."

LG's choice of SanDisk was a blow to Samsung's strategy of using the MP3 player market as a stepping stone toward a greater share of Korea's flash-memory business. Samsung had projected flash-memory sales of more than $50 million this year. With domestic companies increasingly going with SanDisk's removable card, observers here said, that target will be hard to reach.

Cheap and versatile

One reason for the rush to SanDisk's multimedia card is that it promises to reduce the price of MP3 players compared with players that use existing flash products. Another plus is flexibility: The SanDisk card can be used in other products, like digital cameras. Sources said Samsung's failure to include forward and backward compatibility to digital cameras hurt its standing in the domestic flash market.

Chan confirmed that SanDisk plans to introduce a 64-Mbyte card in the second half of the year.

Last year, Samsung supplied most of the domestic MP3 player developers with flash memory, but it had to play catch-up when SanDisk stepped up its marketing here recently.

An executive of one developer of MP3 players complained about Samsung's pricing for flash, adding that many developers have concluded that the best way to reduce the price of their players is to switch to the removable card.

Moreover, developers complained that Samsung's Smart Media flash card comes only in 16-Mbyte versions, not the standard 32-Mbyte. Samsung officials said they plan to introduce a removable 32-Mbyte card during the first half of the year.