Intel will be able to sell 2Gb NOR chips by using its stacking technology, Harrison said. By the time it moves to its 45-nanometer technology, it should be able to cost-effectively produce 2Gb chips, he said.

Flash memory is used in mobile phones, PDAs and other embedded devices to store data without the constant supply of electricity needed for DRAM or the moving parts of a hard drive. NOR memory has traditionally been the memory of choice for mobile phones due to its reliability and short read-times.

NAND memory has come on strong, however, as memory cards and other devices take advantage of its density and fast write speeds. NAND memory is expected to produce 69 percent of all flash memory revenue in 2006, whereas in 2004 it accounted for 45 percent, according to data from iSuppli.

Intel is addressing the NAND market through a joint venture with Micron Technology. Sales of MP3 players like Apple's iPod nano and Shuffle have helped push the NAND market, and Apple is one of the first customers for Intel and Micron's joint venture.