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NEW YORK (REUTERS) - Shares of No. 2 chipmaker Advanced Micro Devices Inc. jumped more than 15 percent Monday after Intel Corp. said it plans to raise flash memory prices, analysts said.

AMD shares were up 97 cents, or 14 percent, at $7.83 on the New York Stock Exchange, after a Taiwan-based Web site reported the news about Intel's plan. Intel later confirmed its intention to raise flash memory prices by 20 percent to 40 percent starting Jan. 1.

AMD shares outperformed the semiconductor index, which had gained about 2.4 percent by mid-afternoon.

AMD spokesman Morris Denton said the company had not decided whether to raise prices.

"We're going to price based on market demand," Denton said, "and we work that pretty closely with our customers."

Yet, analysts said an Intel price rise suggests the market is getting stronger.

"Obviously, Intel won't jack up prices unless there's a shortage of product, which would indicate others would be raising prices," Needham & Co. analyst Dan Scovel said. "It indicates there are pretty favorable market conditions out there for flash memory."

Intel shares were up 28 cents at $20.33 in mid-afternoon trading after reaching $20.55 earlier.

The news also helped push up shares of smaller chipmaker Atmel Corp., Scovel said. Atmel shares were up 95 cents, or about 34 percent, at $3.76.

Intel spokesman Tom Beermann cited "strong demand for flash memory" as the reason for the price increase.

Price increases would have a stronger impact on AMD than Intel, analysts said, because flash memory constitutes about 30 percent of AMD's revenue and only about 8 percent of Intel's revenue.

"AMD has higher leverage (in flash memory) than Intel," said Eric Ross, an analyst at Investec. "If the prices go up, AMD's going to feel it more,"

Analysts said they have been anticipating more demand for flash memory, especially in the new generations of cellular phones. Flash memory allows devices to save information even when power is off, enabling them to turn on quickly.

New-generation handsets "are using double, triple, sometimes quadruple the amount of flash memory per cell phone as previous generations," said Scovel.

Companies such as Intel and AMD already are benefiting from the need for more memory, Scovel said. "But this is the first time we've heard numbers this pronounced associated with it," he added, referring to the price hikes.

The Web site that first reported Intel's price plans, Digitimes, also reported that AMD plans to merge its flash business with Japan's Fujitsu. But analysts downplayed the significance of that news.

Scovel said because AMD has had a long-time partnership with Fujitsu, the news was not all that surprising.

AMD spokesman Morris Denton declined to confirm the Fujitsu story but said, "We're always looking for ways to improve the nature of our relationship."

JavaFox

Semi-conductor stocks have been doing a lot better than this article would lead you to believe. AMD shares are up almost 100% since October. And Intel is up 63%. You would think the article would mention these things. O.o