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Spansion unit files for bankruptcy protection

Posted: 12 Feb 2009     Print Version  Bookmark and Share

Keywords:bankruptcy  flash memory  restructuring 

Spansion Inc. announced that its Japanese subsidiary has filed for bankruptcy protection with total liabilities of Rs.4,027.25 crore ($810 million), the latest victim of the chip sector's global downturn.

Sharp price falls and weak demand in the chip market, which are also hurting bigger rivals Samsung Electronics Co. and Toshiba Corp., have prompted Spansion itself to restructure operations and explore a possible sale.

The sector's worst-ever slump had pushed Germany's Qimonda AG to file for insolvency.

U.S.-based Spansion, the world's third-biggest flash memory maker owned 11.4 per cent by Fujitsu Ltd and 8.7 per cent by Advanced Micro Devices, said the Japanese unit's filing does not "materially" affect its global operations.

It added that the unit, Spansion Japan, had sufficient cash on hand to meet its short-term working capital needs.

"We intend for Spansion Japan to continue to operate throughout the restructuring period," Spansion Inc President and CEO John Kispert said in a statement.

Spansion is the world's biggest maker of NOR-type flash memory, which competes against the more popular NAND-type flash memory made by Samsung and Toshiba.

Fujitsu also played down any impact on its chip sales.

Analysts said the failure of Spansion Japan, the biggest by a manufacturer in Japan this year, would have little effect on other flash memory makers.

"The NOR flash market is gradually shrinking as NAND flash improves performance and replaces NOR chips," said Park Hyun, an analyst at Prudential Investment & Securities in Seoul. "Samsung makes NOR flash chips but their portion of overall sales is limited and Samsung isn't very aggressive in expanding NOR."

Used in mobile phones, NOR-type memory typically reads stored data slightly faster than NAND type memory, while NAND writes new data into storage faster than NOR.

Spansion Japan employs 1,350 workers, or about 14 per cent of Spansion Inc's group workforce, according to research firm Teikoku Data Bank. It had sales of Rs.9,889.79 crore (179.7 billion yen) in 2006.

Spansion, weighed down by long-term debt of about Rs.7,457.88 crore ($1.5 billion), has been restructuring its operations with workforce cuts and sales of assets.

Writing down obsolete chip equipment and a tumble in the share price of Spansion hurt Fujitsu's earnings last business year.

EE Times

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