March 12, 2007 – According to chipmaking equipment suppliers, NOR flash chipmaker Spansion Inc. reportedly will begin increasing outsource to dedicated chipmakers next quarter, according to the Taiwan Economic News (CENS). The announcement follows on the heels of Spansion’s sale of two 200mm wafer factories in Japan last year.

Contract chipmakers including Taiwan Semiconductor Manufacturing Co. (TSMC), ChipMos Technologies Ltd., Power Technology Inc., and Kyec Yuan Electronics Co. Ltd. will benefit from the U.S. chipmaker’s outsourcing strategy, CENS says.

Spansion, equipment suppliers claimed, would contract TSMC to make its NOR flash memory chips next month at contract volume of 20,000 200mm wafer equivalents a month. TSMC, currently the world’s No. 1 pure foundry supplier, will offer 0.11µm process to make the chips at the beginning and 90nm process in the second half.

TSMC remains Spansion’s exclusive contract supplier. Equipment suppliers pointed out that Spansion only farms out mature products to contract suppliers and retains production of high-end products at in-house 300mm wafer fabs. They estimate contract volume to increase to 35,000 wafers a month in the second half this year.

According to CENS, Spansion sold its two factories in Japan last year as part of its strategy to pull its gross profit net rate back to 20% level by trimming production costs. The company saw global revenue of US$2.5 billion and remained the world’s No. 1 NOR chip supplier throughout 2006, although the company suffered a US$148 million loss. Industry watchers predicted the company would record a loss into this quarter.