By Sachi Izumi
TOKYO Feb 10 The Japanese unit of flash memory
maker Spansion Inc SPSN.O said it filed for bankruptcy
protection on Tuesday with total liabilities of $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 rivals Samsung Electronics Co (005930.KS) and
Toshiba Corp (6502.T), as well as declining popularity of
NOR-type flash memory have prompted Spansion Inc itself to
restructure operations and explore a possible sale.
The filing by Spansion Japan comes after Germany's Qimonda
QMNDQ.PK, the world's No.4 maker of dynamic random access
memory (DRAM) chips, became the first major chipmaker to file
for insolvency last month amid the global financing squeeze and
the sector's worst-ever slump.
U.S.-based Spansion Inc, the world's third-biggest flash
memory maker, said the Japanese unit's filing does not
"materially" affect its global operations.
It added that the unit 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 Inc, owned 11.4 percent by Fujitsu Ltd (6702.T) and
8.7 percent by Advanced Micro Devices AMD.N, is the world's
biggest maker of NOR-type flash memory with a market share of
about 40 percent.
NOR memory competes against the more popular NAND-type flash
memory made by Samsung and Toshiba.
NOR is used in most older cellphones and is still a mainstay
in lower-end models that don't require large storage capacity
for applications like music and video downloads.
The industry has been shifting towards the more expensive
NAND memory because of its much higher capacity.
The global NOR memory market was worth $7.7 billion in 2007
but likely shrunk 16 percent to $6.4 billion in 2008, according
to data compiled by research firm iSuppli.
Fujitsu played down any impact of Spansion Japan's failure
on Fujitsu's chip sales.
Analysts said the failure, the biggest by a manufacturer in
Japan this year, would have little effect on other flash memory
"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."
Spansion Japan employs 1,350 workers, or about 14 percent of
Spansion Inc's group workforce, and had sales of 179.7 billion
yen ($1.96 billion) in 2006, including sales of wafers to the
parent company, research firm Teikoku Data Bank said.
A spokesman at Spansion Japan said it does not reveal
Spansion Inc, weighed down by long-term debt of about $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 Inc hurt Fujitsu's earnings last
Fujitsu shares ended trade up 0.3 percent at 372 yen,
against a 0.3 percent fall in the Nikkei average .N225.
(Additional reporting by Mayumi Negishi, Nathan Layne in Tokyo,
and Rhee So-eui in Seoul; Edited by Brent Kininmont)