Samsung Electronics' semiconductor arm has begun volume production of 128GB embedded memory modules for next-generation smartphones, tablets and other mobile devices, the company said on Tuesday.

An upgrade to 128GB would double or quadruple the storage capacity compared to today's high-end smartphones. Apple's new iPhone 5 has up to 64GB of integrated storage while the recently announced Optimus G from LG Electronics and Nokia's Lumia 920 both have 32GB.

Consumers watching and shooting video along with cameras that have higher resolutions will drive the need for more storage capacity, while the inclusion of more integrated storage lessens the need for a card slot, allowing smartphones to become even smaller, according to Francisco Jeronimo, research manager at analyst IDC.

The new 128GB eMMC (embedded MultiMediaCard) Pro Class 1500 memory reads data sequentially at up to 140 megabytes per second and writes it at up to 50 megabytes per second, which is five times faster than Class-10 rated external memory cards, according to Samsung.

Samsung doesn't say when it expects the first phones with 128GB modules inside to arrive, but most of the phones that will duke it out during the holiday season have already been announced. The next big round will appear during the CES trade show in January or at Mobile World Congress in February, which would also give vendors more time to integrate the memory chipsets in their designs.

Samsung itself is a potential candidate to come out with products, according to Malik Saadi, principal analyst at Informa Telecoms & Media. Jeronimo said he wouldn't be surprised if Apple did the same.

Today, storage capacity has holds a special significance on smartphones and tablets, as it is one of only a few ways vendors can increase their margins.

For example, there are three versions of the new iPhone, and the only thing that separates them is the built-in storage of 16GB, 32GB or 64GB. The 64GB model costs US$200 more than the 16GB model when bought with a new two-year wireless service contract, while Apple pays just $31 for the extra 48GB of memory, according to IHS iSuppli's initial virtual teardown of the device.

Apple's iPhones, unlike some other smartphones, have no memory card slot for adding additional storage, forcing people to buy a model with more integrated memory if they want more capacity.

Only 4 percent of phones sold next year will have 64GB of built-in storage, and this year the iPhone will account for about two-thirds of all 64GB smartphones sold, Informa predicts.

"It is highly profitable for Apple because the margins are high," Saadi said via email.

But for other vendors it will still be hard to justify the cost of adding 128GB storage into a smartphone, Saadi said via email.

Another reason phone manufacturers might shun more integrated storage is the growing availability of cloud-based services, which with the help of the improved capacity LTE has will become more useful, according to Jeronimo.

"You don't need a lot of storage on the phone if you can access the content directly from the Internet," said Jeronimo.