The deepening global recession continues to take its toll on companies in the technology sector. Many of the companies are fighting the economy and a global oversupply leading to historically low prices for flash memory and other memory products.
Spansion Inc. announced today that it has filed for bankruptcy protection in American courts. Spansion is the world's third largest maker of flash memory. Spansion had recently announced that it was looking into a possible sale of the company. The chipmaker will try to reorganize debt and refocus on more profitable aspects of its business while in bankruptcy.
Along with Spansion, four of its other U.S. affiliates also filed for bankruptcy protection in America. Total assets for Spansion and its affiliates according to court filings totals $3.84 billion and total debts amounted to nearly $2.4 billion.
According to Spansion, it will focus its operations moving forward on its line of embedded flash products, IP solutions, and profitable parts of the wireless segment. Spansion reports that it has consulted with an ad hoc consortium of holders of $625 million in senior secured floating rate notes that are due in 2013. The firm reports that it is engaged actively in discussions with the consortium.
Among the major owners of Spansion are Fujitsu with an 11.4% share of the company and AMD with around 8.7% of the company. AMD recently received shareholder approval to complete the spinoff of The Foundry.
The reasons behind the bankruptcy filing according to court documents include the oversupply of chips on the market that hurt cash flow in 2007 and 2008 along with lost liquidity due to $122 million in sour auction-rate security investments. Another significant case of was what Spansion calls a "sharp decline" in global demand for its products.
Spansion subsidiaries outside of the U.S. and Japan are not involved in the bankruptcy proceedings. The last major flash maker to enter bankruptcy was Qimonda.