Fujitsu finances Spansion expansion

By Simon Burns on Apr 4, 2007 3:34 PM
Filed under Finance

Flash maker swaps old Japanese plants for new.

Flash memory chip maker Spansion has generated US$150m in funds by selling older Flash memory plants to former parent Fujitsu Semiconductor.

Spansion will use the cash to help build a new high-tech Flash memory plant, the company announced today.

Fujitsu will continue to operate the two plants in Japan, and will sell part of the output to Spansion on a contract basis.

Spansion is using the US$150m payment, together with external financing, to build a more advanced 300mm wafer Flash memory fab at a nearby site.

"[The new 300mm fab] plans are on track and we expect to be the only Nor Flash memory provider producing solutions on 300mm later this year," said Spansion chief executive Bertrand Cambou.

"This agreement enables us to focus our capital on leading-edge technologies, and provide flexible supply in times of peak demand while continuing a long-term and stable supply to our customers."

Spansion was founded as a joint venture between Fujitsu and AMD before being spun off as an independent entity three years ago.

The firm specialises in Nor Flash memory, rather than the more commonly used Nand Flash variety. Nor Flash is faster, but more expensive than Nand Flash.

Increasing competition in the Flash memory market is putting pressure on Spansion, however, despite its leading position in Nor Flash.

A recent report from credit information firm Fitch Ratings noted that "pricing pressures across Spansion's end markets will continue through 2007, constraining meaningful gross margin expansion and, therefore, the company's ability to achieve operating profitability".