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Technology Stocks : Spansion Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Pam who wrote (3113)	1/22/2008 11:15:21 AM
From: Joe NYC	Respond to of 4590

Pam, Any estimates as to what portion of their Revs are coming from new design wins vs. legacy business? The percentage is greater in wireless, where the designs just don't last that long, compared to other embedded, where a design may last more than a decade. But even in wireless, a handset design may last 2 years. So there is still some percentage of chips sold to wireless that are 110nm. Most of the designs wins that entered production in 2007 were 90nm, and now they are 65nm. My ballpark for process technologies in wireless for 110nm / 90nm / 65nm right now is 30% / 60% / 10%. One additional benefit of Spansion gaining market share in 2008 would be that the desingn wins would be 65nm, and the percentage of 65nm will grow faster... There is no question NAND market is vastly different from NOR market and it seems like a significant portion of Spansion's business (or for that matter, the entire NOR industry's business) is coming from servicing legacy designs! This could be a major problem because in some sense it is slowing down the pace at which companies are trying to lower the cost per bit! That's true, but the same is true for Spansion NOR competitors. That's what it takes to compete in that business, which is for the customers to have confidence that you will service the designs as long as it takes. This also demonstrates that in NOR business (unlike NAND), having your entire capacity on the latest process node is not really a an advantage. You need to have a mix. As far as cost per bit, what helps is (as I said above) when you gain share - the average process technology of chips sold will move forward. Another component is where you are vs. the leading process technology node. I don't know how long you have followed Spansion, but Spansion was lagging NAND players by a lot, and also Intel by at least one process node, while Spansion was struggling to put Mirrorbit into production. But from 110nm, Spansion had quick transitions to 90nm and 65nm, closing the gap and moving ahead Numonyx within just last 2 years. There are 2 reasons why Spansion is ahead of Numonyx. Mirrorbit (charge trapping) vs. floating gate amounts to advantage of almost half of process technology node. That's for 200mm 65nm (Fab25) vs Numonyx. But the advantage is greater for 65nm 300mm SP1. Now, I mentioned above the confidence of customers. At this time, Numonyx probably does not have an over-abundance of that - due to continued uncertainty over the new corporate structure of Numonyx, and FUD that Spansion generates about roadmap of floating gate. While some NAND players are working on charge trapping, Numonyx seemed to have bet of phase change, which doesn't seem to be going anywhere. There is a scenario (with non-zero probability of happening) that Numonyx will just collapse within next year or 2. If phase change continues to go nowhere, and if Numonyx does not eek out one more node past 65nm, customers will rush for exits, and knock on Spansion door. Joe