Apple Computer got a bargain on the memory chips that make its new iPod Nano music players so slim. And in doing so, Apple has thrown the market for flash memory into a tizzy: forcing prices up for other manufacturers and driving prices down for consumers.

Flash memory (or more precisely, NAND flash memory chips) stores data on a semiconductor. Most consumers use it in the form of U.S.B. flash drives to ferry data from one PC to another, or as memory cards that record hundreds of photos in digital cameras. Apple uses flash memory as a substitute for a hard disk drive so it can make its music player only a quarter-inch thick. (NAND is an industry term that refers to a form of logic gate programmed on the semiconductor.)

No analyst seems to know for sure what Apple paid Samsung Electronics for the memory chips; estimates range from $85 to $120 for a four-gigabyte chip that goes into a $250 Nano, or about a 30 percent discount in exchange for buying 40 percent of Samsung's output this year.

But that big purchase has tightened supplies of flash memory chips for everyone else. The repercussions have been felt by about 200 minor makers of MP3 players in Asia, or about half the industry, which have gone out of business because they cannot get parts, said Nam Hyung Kim, principal analyst at the iSuppli Corporation, a market analysis firm that specializes in semiconductors.

Manufacturers' prices are starting to rise even though historically the price of flash memory has fallen about 40 percent a year. Don Barnetson, Samsung Semiconductor's associate director of marketing for flash memory, said, "We are extremely constrained." The outlook for consumers, conversely, is that prices will continue to fall for U.S.B. flash drives, memory cards and MP3 players. That is partly because of the iPod Nano. Like its earlier incarnation, the iPod Shuffle, the Nano can be used like a U.S.B. flash drive to move an Excel file or a PowerPoint demonstration from one computer to another.

Consumers who know that may choose to forgo buying the generic fob for the Nano. "A four-gigabyte flash drive isn't stylish and trendy, and you can't use it to play music," said Joe Unsworth, a senior analyst at Gartner, the technology research firm.

A result, Mr. Unsworth said, is a sudden drop in the retail price of two- and four-gigabyte flash drives. Those devices had been going for around $300 for the four-gigabyte, but now must undercut the Nano or risk losing sales to it.

While no analyst will predict prices for iPods, they expect Samsung to continue to stimulate demand for this technology with more discounts for big customers.

Consumers have been conditioned to expect ever-lower prices for flash drives and memory cards. They also have become accustomed to watching for promotions of drive and card makers like SanDisk, Lexar or Viking that are fighting for shelf space - or the promotions of retailers using the devices as loss leaders to attract customers.

Shoppers often have a fixed budget for memory and try to get as much as they can for a particular price. The sweet spot for consumers had been 512-megabyte cards and drives, but that has quickly shifted up to one-gigabyte devices in the last month. A 512-megabyte memory card can sell for as little as $34, though it is generally about $50.

A careful shopper can easily find twice as much memory, a one-gigabyte card, for just a bit more, about $65. But increasingly it can be found for as little as $50, only marginally more than the wholesale price of about $48. "Unlike any other semiconductor, we have tremendous price elasticity," said Mr. Barnetson of Samsung, which controls about 60 percent of the market for flash memory. "A small adjustment in price allows us to quickly soak up demand."

The trick for consumers is to think in ratios. If the price of a card is less than twice the typical price for the next smaller size, it is a probably a good deal. A shopping comparison site like Cnet.com or Shopping.com will quickly indicate the range of prices.

Analysts expect that the price of flash memory will continue to fall at its historic rate as Samsung, Toshiba and other makers expand their factories or shift other chip production lines to flash memory. As makers get more efficient at making the chips, they are able to drive down costs and drop prices to further stimulate demand.

Margins for the chip makers are quite healthy. Mr. Kim of iSuppli says that even with the Apple discount, Samsung's operating profit margin for flash memory is about 45 percent, high enough to attract several chip makers to set up production lines.

Flash memory is showing up in more places. It is being used in Sony's PlayStation Portable game machine to play music and videos. Some games have additional levels of play available on flash cards. Last week, a consortium of flash memory makers announced a new flash drive technology, U3, that allows programs and system settings, as well as data, to be carried around on a flash drive to any PC.

Most of all, the flash memory makers have their eye on cellphones. As those devices gradually add more functions, like playing music and video or mapping by global positioning satellite, they will demand ever greater amounts of data storage.

And tough competition from tiny hard disk drives means consumers will be enjoying lower prices for some time to come. The growing popularity of flash memory will not doom the alternative storage device, the one-inch hard disk drive, said William D. Watkins, president and chief executive of Seagate Technology, a maker of those tiny drives. He wants his devices to be the storage of choice in cellphones and other hand-held devices that will soon be demanding 20 to 30 gigabytes of storage.

For now, he has the price advantage. Mr. Watkins points out that a four-gigabyte hard drive costs about $50, considerably less than comparable flash memory - even when discounted heavily. But hard drive makers have the price advantage only at two gigabytes or more.

Smaller amounts of storage are far cheaper in flash memory. Every year, flash gains the price advantage in the next larger size; in 2006, four-gigabyte flash memory cards will be cheaper than four-gigabyte hard drives.

All the while, Seagate will be trying to make those one-inch drives even thinner as Mr. Watkins, like millions of consumers, watches the price of flash memory fall. "Never underestimate price," he said.