The memory market needs to ''rationalize the number of suppliers,'' said G. Dan Hutcheson, CEO of VLSI Research Inc. (Santa Clara, Calif.), in a presentation at ISS, which took place last week. ''Memory suppliers (can also) restore profitability by bringing down capex.''

The memory market must not only consolidate down to two or so suppliers in each segment, but they must also change their reckless behavior. For example, memory vendors must refrain from making ''undisciplined investments'' in the sector, thereby ensuring ''profitability and positive cash flow,'' said Bob Johnson, an analyst with Gartner Inc. (Stamford, Conn.), during a presentation at the event.

Vendors must also take a more rational approach to scaling and product pricing. Hutcheson directly--or indirectly--blamed Samsung Electronics Co. Ltd. for driving down the prices too fast for NAND, thereby turning the once-booming market into a complete mess.

Flash has been the fastest growth market in the history of semiconductors, ''but it's been squandered,'' he said. ''What about Hwang's train wreck?''

He was referring to Hwang Chang-gyu, formerly the head of Samsung's chip unit, who devised something called ''Hwang's Law.'' The axiom implied that NAND transistor count would double every year in leading-edge devices, thereby driving down prices by some 40 percent a year as means as to enable new applications.

The idea worked--and backfired. Prices for NAND have fallen like a rock, enabling new applications like MP3 players, solid-state drives and others. But too many vendors followed the same path, creating excess supply and falling average selling prices (ASPs).

Now, NAND vendors are losing money. Even Samsung is reeling due to the glut and Hwang has apparently paid the price. In recent times, Hwang was demoted to chief technology officer and president of the corporate technology unit. Last week, he apparently left Samsung, according to reports.

As part of the changes in a major shake-up, Samsung Electronics has consolidated its business divisions from four to two, in an effort to jumpstart demand. The four divisions were semiconductors, LCDs, mobile phones and televisions. The new Device Solution division, which includes ICs and LCDs, will be run by Lee Yoon-woo, vice chairman and CEO of Samsung Electronics.