SanDisk shares up as analyst sees memory chip prices rising

Lazard Capital analyst Daniel Amir said in a note to investors that contract prices for NAND memory chips should increase 10 percent to 15 percent in May.

NAND chips, which are found in iPods, digital cameras and other portable devices, suffered a price slump in 2007 because of oversupply.

Amir said he already noticed a price increase in April, in part because iPod maker Apple has restarted buying NAND chips from Samsung and Toshiba.

Demand is already up 5 percent in the first half of May and customer inventory "continues to be in line with expectations as demand gradually picks up due to increased seasonality in the personal computer market," he said.

Amir maintained a "Buy" rating on SanDisk. He said he saw major Asian memory chip maker Hynix losing significant market share in the next few months, as many of its chips will be obsolete by the end of the year.

SanDisk shares rose 59 cents, or 2 percent, to $29.78. They have traded in the last year between $19.54 and $59.75.