Japan's Toshiba said on Wednesday it will match rival Samsung 's March launch of the industry's first 2-Gigabyte NAND flash chip by mass-producing a chip with as much storage a month later. Toshiba, the world's second-largest NAND chip maker after Samsung, is eyeing an expected a surge in demand propelled by Apple's music-playing iPhone, analysts said.

The iPhone -- which will come with 4 or 8 gigabytes of NAND -- has fueled hope among flash memory makers, weary of price falls eating away at profit margins, said Mizuho Investors Securities analyst Yuichi Ishida.

Toshiba, which aims to take a combined 40 percent market share with partner SanDisk by 2008, will begin by shipping samples of its 2-Gigabyte chips in March, using 56-nanometre process technology, and plans monthly shipments of 300,000 chips from April.

Cutting edge 50- and 56-nanometre microchips have smaller gaps between transistors than 60- or 70-nanometre ones, meaning more power can be packed into less space for lower per chip costs.

Toshiba also expects to begin mass production of 1-Gigabyte NAND chips using 70-nanometre processes by the end of January.

Memory makers have been boosting plant spending in quest of ever smaller circuitry, despite price falls of some 70 percent in 2006.