Chip makers are breathing a sigh of relief as the supply/demand balance in the long-depressed memory market stabilizes chip prices, but some smaller players could be left behind as the industry recovers.

Top memory makers, such as Samsung Electronics Co. (005930.SE) and Micron Technology Inc. (MU), decided early to invest in expansion, seen now as prescient decisions that will likely lead to big gains in market share over the next year.

"They are going to hit the sweet spot perfectly," Raymond James analyst Hans Mosesmann said. "Those are the two guys that are just really going to do well over the next year."

Meanwhile, smaller players - which conserved cash to make up for widening losses - are finding it difficult to fund the manufacturing expansions needed to defend their market share against bigger rivals. Long waits for new equipment could keep any chip makers that haven't already beefed up manufacturing capacity out of the race for several months.

Samsung and Micron, along with Hynix Semiconductor Inc. (000660.SE) and Elpida Memory Inc. (6665.TO), are leaders in the market for memory chips, which store electronic data in everything from computers and servers to mobile phones.

For the past three years, the industry has been stuck with a huge oversupply of chips, resulting in massive price drops and big losses for manufacturers. However, prices have stabilized in recent months as chip makers slashed capacity to stave off bankruptcy and formerly large players, such as Germany's Qimonda AG, went under.

The industry is notoriously cyclical, and mounting losses have historically been followed by strong profits - but only for the companies that can restart production quickly.

In this still-nascent recovery, Samsung and Micron look to be in the best position to take advantage. Unlike others that posted years of losses, Samsung has only recently turned into the red. With market share for the two main types of memory chips, DRAM and flash memory, at 34% and 40%, respectively, according to iSuppli, Samsung has the volume to profit, while others perish.

Meanwhile, Micron's $400 million purchase of Qimonda's stake in Inotera Memories Inc. (3474.TW) last year will allow Micron to quickly add manufacturing capacity as making chips again becomes profitable.

Micron's lead in the memory race has spurred a giant leap in its stock price. Shares have more than tripled since reaching multiyear lows below $2 last November. The stock was recently down 2.7% to $8.17 as investors took profits following better-than-expected fiscal fourth-quarter results Tuesday.

Mosesmann said Micron, currently the fourth-largest producer of both types of memory chips, could double its market share over the next year.

Other memory makers will have a tough time catching up as manufacturing equipment is currently hard to get, iSuppli memory analyst Michael Yang said. A company placing an order for chip equipment today would have to wait about six to nine months for delivery, he said. Normal wait times are between one and two months.

"Even if they do it now, they need to get in line," Yang said.

Micron Chief Executive Steve Appleton said that over the next couple years, he isn't expecting much additional manufacturing capacity from competitors, besides Samsung and potentially Elpida.

"In terms of optimizing some of the facilities that were in place, there's not a lot of capital for that to happen outside of what we're probably doing," Appleton said.

-By Jerry A. DiColo; Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com