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

To: Pam who wrote (3354)	2/13/2008 9:39:52 AM
From: Rink	Read Replies (1) \| Respond to of 4590

Pam, re: a. no pricing power because of imbalance in Supply/Demand, b. lack of growth as other solutions are replacing part of NOR's business and vendors fighting for new design wins, and c. too much debt on SPSN's B/S in a business that is capital intensive a. Only Intel and Spansion reported higher inventory, right? Spansion has a book to bill of 1.3 so it's not exactly a disaster. Intel is loosing share, but it's difficult for them to win back market share with a price war as that would make the creation and financing of Numonyx more complex. It's not exactly impossible that this is a sufficient enough reason not to start a price war for all involved. There's a lot riding on exactly this question: Whether or not there will be a new price war. b. Somewhat true. NOR market is projected to continue to grow. Slowly but still for years to come. It's a mature market. c. True. It'll be quite difficult for Spansion if they don't reach BE in H2. They've got a very good roadmap on how to get there which makes me believe it'll work out provided that there's no price war like start last year (quite similar to your comments). I think Numonyx will cut costs and move to higher margin business in order to achieve BE in order to obtain financing for their emty Catania fab. This might mean continually decreasing outsourcing to both its parents (Numonyx has only got one 200mm fab, and will keep running it at ~100% capacity), as well as focus on smaller nodes. In short I think they'll go for higher profitability at the cost of lower market share. This might mean for Spansion that they'll gain share against Numonyx based on a lower cost / Mb and on more diversified portfolio. Samsung can't grab share from Spansion that easily because of the same reasons: - Spansion's lower cost / Mb for NOR in all except very high end where (One- and other sorts of) NAND/xRAM combo's compete, - Spansion's more diversified portfolio, and on top of that - Spansions market position (they're not a cell phone competitor like Samsung is; Nokia isn't likely to buy much from Samsung even if there would be a slight cost benefit). This is btw also why we are silly enough to compare cost of NOR with cost of NAND: Because they already compete with each other in high towards mid end mobile phones. BTW2: Spansion has diversified the most in the mature NOR market and start to leverage their solutions outside of it, albeit slowly. Regards, Rink