MemoryExpert

The Spansion Expansion

For your sake I hope you listened to me back in March.

The Spansion Expansion

Uh Oh...I'm guessing you will be taking a hefty loss tomorrow.

The Spansion Expansion

Here is why your points are just wrong:
1) they have been taking share from Numonyx et al. and will continue to take share from any 200mm producer. with only have 1/3 of the market right now, what's to stop them being the Samsung of NOR?
Samsung is a broad based memory supplier capable of mixing technologies and weathering ups and downs in different markets by having exposure to different markets. Samsung can shift production and investment between Nor, NAND, and DRAM as the market dynamics shift. Samsung has a lot of money in the bank and relatively little debt. Since the Nor market is shrinking nearly 10% per year they would have to gain 3% market share every year just to stay flat. Eventually that game runs out. The Nor market is starting to look like the EEPROM market.
2) they have a data product that they at least believe can compete with a low density nand.
Most of the profits in NAND are high density. That's why the cost curve bottoms out below 4Gbits.
3) they have the eclipse product, which looks to me like a very cool thing. it gives the oem's the chance to build mutiple products around the same "engine," if you will, by just changing the software. that led to savings at all the automakers, and it strikes me as a great value-add for phones too.
A good idea that has no second source and if successful would take quite a while to shift over. Only software changes is a huge barrier, particularly if there is no clear benefit. Eclipse also does not deliver the programming and erase speeds of NAND. Although that may not be absolutely a killer. I challenge you to find any phone in the world using this stuff before you bank on it to turn the company around. Even any phone manufacturer willing to endorse and announce plans to use it.
4) SMIC is finally making progress on a NAND device using Spansion's/Saifun's IP.
Haven't heard that but until a product is in the market it will only add to expenses not the top or bottom lines.
5) DRAM market is a potential target if Spansion manges to shrink to 45nm by '09.
Except for the whole latency, bandwidth thing they could be cost competitive at 45nm in '09 vs. 65nm DRAM. So they could sell 1Gbit high end Nor to compete with DRAM for what $1.30? Have you seen DRAM prices lately?
Of course there is always the risk nothing works. But with so much potential it looks less like a Ford and more like Boeing before the announced the Dreamliner.
What was the last time Boeing lost money for 16 quarters straight after announcing they would be profitable time and time again?

The Spansion Expansion

There is no question that Spansion is out in front of Nor vendors in fab technology. But the problem is that only a small portion of their portfolio will migrate to the new process. And that is only the high density parts. The low density parts don't see any cost reduction when they shrink and the high density parts have to compete with NAND pricing. All parts also have a long qualification cycle they have to go through before customers will use them which will push out any real cost benefit from the new fab 6-12 months. While I agree Spansion is in relatively better shape than Numonyx, it's kind of like saying GM is in better shape than Ford. I wouldn't want to invest my money in either.
For Spansion's stock to turnaround there would have to be a major shakeup in management and a significant restructuring around a smaller lower density market. And they better do it fast cause with their debt load, cash position and burn rate they are headed for bankruptcy in 8-12 quarters.