Toshiba is the number two ranked NAND supplier, after Samsung in first position, and has seen sales climb to $849 million in the third quarter, up from $673 million in the second quarter. This has resulted in revenue growth rate of 26.2 percent from the second quarter.

In contrast, Samsung's revenue growth has only been 4.3 percent from the second quarter. The result is that Toshiba has closed the market share gap on Samsung and trails by only 15.3 percent, compared to 21.6 percent in the second quarter of 2006.

Although Hynix saw revenue growth of 11.9 percent, quarter-on-quarter it was not enough to see Toshiba move further away from third-ranked Hynix, according to iSuppli figures.

The figures from iSuppli also show the impressive revenue growth seen by both Intel and Micron as part of their manufacturing partnership in IM Flash Technologies. Though coming from a very low base, Intel in particular saw sales increase by 127.8 percent in the quarter while Micron saw a 35.3 percent sequential growth rate as its JV 300mm fab in Manassas, Virginia continues to ramp NAND SLC devices.

Though demand for NAND is seasonally relatively strong, several NAND suppliers, Renesas, STM and Qimonda all saw revenues decline sequentially.

According to iSuppli, sales of NAND flash memory in the third quarter reached $3.1 billion in the third quarter - an 11.8 percent increase over the second quarter - but per-megabyte NAND prices fell by 22 percent in the third quarter. Megabyte shipments actually grew by 44 percent, highlighting the continued supply/demand imbalances that have plagued the NAND market all year.

Indeed, Nam Hyung Kim, director and principal analyst for memory ICs and storage systems at iSuppli, believes that the demand expectations for MP3 players have not materialized to the degree suppliers had hoped for and is now planning to revise forecasts downwards.

"iSuppli previously predicted 21 percent sequential sales growth for the fourth quarter," noted Kim. "The primary cause of the reduced outlook was the market for flash-based MP3 players, whose sales appear to be falling short of expectations."

Interestingly, Samsung and Hynix's production of NAND parts using MLC technology increased to 40 percent and 50 percent, respectively, of total manufacturing during the third quarter, beating iSuppli's forecast. At the present rate of adoption, 80 percent of global NAND megabit production will use MLC technology by the first quarter of 2007, iSuppli predicts.

Kim echoed the concerns raised by Gartner on Monday that it would be wise for memory manufacturers where possible to look at shifting NAND production over to DRAM to reduce an expected worsening in the NAND over-capacity scenario through first quarter 2007.