Chief Financial Officer Judy Bruner warned investors to "expect a sharp drop in third-quarter revenue as the company moves aggressively to cut the prices of its memory chip products to reduce a build-up of inventory:, according to the report.

"We are forecasting third-quarter total revenue between $US750 million and $US850 million," Bruner told investors on a conference call following its second-quarter report.

SanDisk reported revenue in the third quarter of 2007 of $US1.04 billion which is far below the range of $US964 million to $US1.24 billion expected by analysts, according to Reuters.

Furthermore, SanDisk said it was delaying the next phase of expansion at the Fab 4 production plant it operates with Toshiba Japan until April 2009.

However, steep price declines for memory chips do tend to translate into rapid price declines for consumers for all gadgets for which flash memory chips are a key component.