Flash memory chip maker Spansion has filed for bankruptcy protection.

Worldwide chip sales fall 28.6 percent, Spansion files for bankruptcy

One week after laying off 35 percent of its workers, computer chipmaker Spansion Inc. filed for Chapter 11 bankruptcy protection.

Sunnyvale-based Spansion (NASDAQ: SPSN) listed about $3.8 billion in assets and nearly $2.4 billion in debts in its filing in U.S. Bankruptcy Court in Delaware.

The company said it plans to restructure its debt and refocus on more profitable markets. Each of Spansion’s U.S. subsidiaries also filed Chapter 11 petitions, company officials said.

In December, the company shut down plants for three weeks, citing a weak holiday season and a sluggish economy. In November, Spansion said its fourth quarter sales would be about 20 percent lower than the $631 million reported in the third quarter.

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.

During 2007, the company posted a $263.5 million net loss on $2.5 billion in revenue.

Spansion, formerly owned Sunnyvale-based Advanced Micro Devices Inc. (NYSE:AMD) and Fujitsu, was spun off in December 2005. AMD and Fujitsu have remained as major stockholders.


Worldwide chip sales fell 28.6 percent in January compared to a year ago, and flash memory chip maker Spansion has filed for bankruptcy protection. Those are a couple of headlines that show just how grim the economic meltdown has become for the semiconductor industry.

The Semiconductor Industry Assocation said that chip sales were $15.3 billion, down from $21.5 billion a year ago. The January figure is down 11.9 percent from December’s sales of $17.4 billion. George Scalise, president of the industry trade group, said that Januaryis historically a weak month but this year it suffered from the erosion of consumer confidence and sales declined across the board.

Demand weakened for key industry sectors such as personal computers, cell phones, automobiles and general consumer items. The bright spot is that inventory levels are very low and there are some signs that forward visibility is improving. Scalise said he was encouraged that the Economic Recovery Act recently signed by President Obama would help drive demand for chips in markets such as energy, health care, and infrastructure improvements.

Those actions aren’t going to help Spansion, which filed for bankruptcy protection on Sunday and which said last week it would lay off 3,000 people, or a third of its workers. The company named a new chief executive, John Kispert, former president of KLA-Tencor, as a replacement for Bertrand Cambou, Spansion’s longtime chief. The company is still up for sale and says it made the filing in consultation with bondholders who hold $625 million in debt coming due in 2013. Spansion is focusing on flash memory market segments where it can make money going forward, such as wireless chips and devices where flash is permanently built into the device.