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AMD, Fujitsu Debut 'Spansion' Flash

Chipmaking heavyweights AMD and Fujitsu Monday unveiled the fruits of their recently cemented relationship, which focuses on Flash memory .

Under their $3 billion FASL joint partnership, the two companies have established the organization's framework and say they will begin to market the chips under the new 'Spansion' global product brand name. The new company is an offshoot of the original manufacturing joint venture, initiated in 1993.

The partnership also marks a marketing milestone. While chipmakers give larger processors their own brands like AMD's Athlon, the majority of microprocessors and controllers are identified generically.

To finish the product line, AMD said it contributed its Flash memory group; Fab 25 in Austin, Texas; its research and development center known as the Submicron Development Center (SDC) in Sunnyvale, California; and its Flash memory assembly and test operations in Thailand, Malaysia, and China. Fujitsu contributed its Flash memory business division and Fujitsu Microelectronics (Malaysia) Sdn Bhd final assembly and test operations.

As previously reported, the newly formed company will support a global workforce of approximately 7,000 employees Dr. Bertrand Cambou, FASL president and CEO will lead the company at its headquarters in Sunnyvale with Japan headquarters in Tokyo. -- The board of managers consists of 10 members, six appointed by AMD and four by Fujitsu including Toshihiko Ono, chairman of the board.

"We plan to make Spansion Flash memory the pre-eminent brand in the memory market," Cambou said in a statement. "The Spansion brand symbolizes new horizons and possibilities for our customers. We expect that the combination of our focus on customers, next-generation technology, process design and integrated manufacturing will help us emerge as the global Flash memory leader."

The newly branded Flash memory will target customers in the wireless, cellular, automotive, networking, telecommunications and consumer electronics markets. Products range from devices based on MirrorBit technology; the simultaneous read-write (SRW) product family; super low-voltage 1.8 Volt Flash memory devices; and burst- and page-mode devices.

The Spansion launch also lets AMD maintain more control over production and sales, especially in Europe, and separate its semiconductor business with its memory business. AMD will own a 60 percent interest in the new company and Fujitsu owns 40 percent. The company's financial results will be consolidated in AMD's financial statements Two-thirds of the No. 2 chipmaker's revenue comes from its processors. One-third comes from its Flash memory business.

But analysts are less than enthusiastic with the deal citing reports that show AMD as the number two flash provider with 19 percent share last year behind Intel's 27 percent control.

Deutsche Bank securities analyst Ben Lynch found little economic benefit to the partnership.

"We see little value creation from this deal other than a few savings in operating expenditures and back-end manufacturing costs," Lynch said in a briefing. "We believe AMD has garnered considerable flash share with Nokia in first half of 2003, yet has not appreciably raised its overall market share. New competition from SEC at Nokia should limit (and possibly reduce) Spansion's gains with NOK, in our opinion."

Lynch also said the partnership should help AMD with some of its monetary problems, but financial details won't be known till the company files its second quarter earnings statement later this week.

In-Stat/MDR analyst Kevin Krewell was a little more optimistic saying the branding has some long-term benefits like creating a physiological aura in the memory market.

"This is only going to help AMD and Fujitsu become as stronger competitor and move up in market position," said Krewell. "They are in better shape to challenge Intel because they appear as one stronger brand, rather than as two lesser brands."