The flash memory business remains in a deep downturn. But new markets could turn famine into feast – and upset several large established industries – such as book and movie publishing – in the process.

So says Eli Harari (pictured), chief executive of Silicon Valley flash chip maker SanDisk. Harari, who spoke Wednesday at the Flash Memory Summit in Santa Clara, said,

"We're running as fast as we can and still can't recover the investments the industry has made in manufacturing plants. An excess of production capacity is creating too much supply. The industry is not in a healthy state," he told an assembly of industry executives and engineers. "The market is waiting for new applications to catch up."

Harari believes the new applications are on the way. At the top of his list are new uses for flash memory chips in cell phones.

"We think the cell phone will be transformed dramatically in the next few years," he said.

Many will have GPS location technology and require flash to store maps and receive location-based advertising. So-called smart cell phones will need flash to store video clips and other data-intensive content people will want to carry around.

"Flash also should enable a "digital book revolution" in the next ten years, replacing paper-based publishing with digital publishing", he said. "This will happen in much the same way digital film undermined the market for traditional film"

Harari simultaneously sees flash memory replacing DVD and Blu-ray technologies in the next five years as consumers become accustom to storing movies and video on handheld devices they keep in their pockets.

By Mark Boslet, Editor at Large.

Video excerpts of Harari's Flash Memory Summit keynote coming soon.