All the buzz this week is about SanDisk's new Sansa MP3 player, which offers twice the storage for the same price as Apple's iPod Nano. It's not surprising SanDisk can offer such a good price, since unlike Apple, it makes its own flash memory and can pass the savings on directly to gadget buyers. News.com is even asking whether Apple has lost its touch, since it hasn't brought out a new iPod model since February.

But Apple's secret with the iPod has always been to jump on the latest technology and package it into a gorgeous device. Back in 2001, with the first iPod, that was a high-capacity, compact hard drive. With last year's introduction of the Nano, Apple adopted flash memory. Now, writes Sean Alexander in his Addicted to Digital Media blog, Apple could be set to take another technological leap, thanks to a $500 million investment it made last November in an Intel-Micron flash-memory joint venture.

Later this year, the joint venture, IM Flash Technology, is set to start making memory chips with unprecedently small circuits, which means more flash memory bang for Apple's buck. (In his blog post, Alexander errs in saying that SanDisk is making chips ten times the size of IM Flash's, but IM's will still be smaller than SanDisk's current line.) So Apple may just be waiting until it can counter SanDisk with even more powerful chips to put inside its iPods. This battle is far from over -- but it will all come down to the chips.