Milpitas (CA) - While demand for flash memory keeps increasing, the competitive pressure is getting tougher for the players in the segment. Sandisk today said that it will be cutting prices for many products almost in half in order to maintain its current market share. To finance the move, the company reduces some salaries and puts a freeze on others. 250 employees will lose their job.

Your next flash memory card or USB stick may carry a whole different price tag than a comparable product one or two months ago. Sandisk today said that NAND component pricing has declined buy about 50% in the past two months alone, mainly due to excess supply as well as weak Q1 demand. As a result, the company saw its retail and OEM pricing fall much faster than anticipated. As a result, Sandisk will cut prices in order to be able to keep its current market shares.

The firm announced that many products will see cuts in the range of 30-40% below Q4 levels. Sandisk believes that there will be a strong pickup for flash memory in demand in the second half of the year, but the company has virtually no visibility when there will be a relief in competitive pressure.

Job and pay cuts will finance the lower product prices. The company said that it will lay off about 250 employees and put a freeze on hiring. There will also be a freeze on all salaries, while VPs will see their salaries decrease by 10% ; the president and all EVPs will see a 15% cut and CEO Eli Harari gets his base salary reduced by 20%. Sandisk expects the workforce reduction and pay cuts to result in savings of about $30 to $35 million.