Page 1 of 2 EE Times (02/04/2009 10:25 AM EST)  Now, rumors are running rampant that Micron Technology Inc. is looking at buying Spansion (Sunnyvale, Calif.), sources said. Micron is a major player in NAND flash, DRAM and CMOS image sensors, but it has no presence in NOR. ''Micron could use the manufacturing facilities, IP, and perhaps try to sustain some of the NOR/NROM/EcoRAM markets that Spansion created,'' according to one analyst. Spansion's NOR devices are based on NROM technology. Last year, Spansion rolled out a new class of memory that is said to replace DRAMs in the datacenter, dubbed EcoRAM. Micron declined to comment. ''It's Micron's policy to not comment on rumor or speculation,'' according to a spokesman for Micron (Boise, Ida.). Last year, Micron signed a definitive agreement to acquire Qimonda AG's 35.6 percent ownership stake in Taiwan DRAM venture Inotera Memories Inc. for $400 million in cash. For some time, there have been reports that Micron is also interested in buying Qimonda, which has filed insolvency at a Munich court. That deal has yet to happen. Like Qimonda, Spansion is running out of options amid losses and poor demand. On Jan. 15, Spansion announced it was exploring strategic alternatives for a sale or merger. The company also announced plans to restructure its balance sheet. Sources indicate that Spansion is mulling bankruptcy fillings. At one time, Toshiba Corp. was looking at Spansion. The problems reached a boiling point when Cambou resigned. Earlier this week, Boaz Eitan, an executive vice president and member of the board, was named interim president of Spansion. Kispert, former president and COO of KLA-Tencor, brings operational and financial experience to Spansion. ''As CEO, Kispert expects to intensify Spansion's strategic and restructuring initiatives to build value for the company's stakeholders, leveraging the company's leadership in the flash memory industry,'' according to Spansion. |
Where did Spansion go wrong?
Still, the question remains: Where did Spansion go wrong?''As the leading supplier to a stagnant market, Spansion has been trying to blaze new trails for their NOR technology, developing ORNAND, a cross between NOR and NAND flash, and focusing on using MirrorBit flash as a power-saving replacement for DRAM in servers,'' said Jim Handy, an analyst with Objective Analysis (Los Altos, Calif.).
''It's too early to tell whether this last will be accepted -- that process is likely to take another two years or more since the approach is revolutionary and acceptance will be slow. ORNAND could have done very well in a typical NAND market, one where NAND makers dropped their lower-density product in pursuit of sales of more profitable high-density devices,'' he said.
''The trouble is, there's such a huge NAND glut today that all NAND makers are taking orders for low density parts that they would have otherwise abandoned. It's better to sell an unprofitable part than to leave their fabs idle. This is not the only way that the NAND market's glut has harmed Spansion,'' he said.
''Major NOR makers profit by selling their highest-density parts. These parts are under extreme price pressure since their key market is camera phones, and these designs can be worked to either use a large NOR, or the combination of a small NOR plus a large NAND. Some designs are even converting to NAND alone. Unless the NOR is sold at a very low price, today's cheap NAND is likely to capture the bulk of the design's flash revenues,'' he said.
What will likely happen to Spansion? Bankruptcy is one option.
''Should the company be forced into bankruptcy several alternatives are available, the best of which will be chosen by the bankruptcy arbitrator,'' Handy said.
''One would simply be for the company's debt to be restructured and business would continue as before. The most dramatic opposite stance would be for the company to be liquidated -- all the employees would be furloughed and assets would be sold off. We see neither of these as likely,'' he said. ''This is good news for the company's customers, who, in a liquidation, would be forced to redesign several products to use competitors' parts.''
Is there another option? ''Although an argument can be made for the sale of Spansion's manufacturing capacity since it consists of hard assets, Objective Analysis believes that the asset that is most likely to be sold to the company's advantage would be their intellectual property,'' he said. ''It is quite possible that some licensing agreement will gather Spansion enough cash to see the company through its current difficulties, however any purchaser would be a visionary with the patience to wait a year or two before seeing any revenue stream.''
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