Spansion Reviews

Spansion's economic model was flawed. For a very long time, AMD and Intel were locked into a price war in flash memory that caused both companies to sell below cost year after year. For Intel, this was a calculated, logical approach. 90% of its revenue came from the highly profitable CPU segment and only 10% from Flash. AMD was split 50/50. By creating severe pricing problems in the NOR flash market, Intel could hamper AMD's growth. When AMD jettisoned the flash business as its own company, Spansion - that was an important step to reducing excessive competitive rivalry. For several years, Spansion operated independently losing $75 to $150 M. Eventually Intel management tired of trying to destroy Spansion and destroying enormous value for its shareholders. I had hoped that when Intel and ST Microelectronics finally spun off and merged their NOR businesses (Numonyx) that there would be finally much needed peace and reasonable pricing. Yet this never came to fruition. Neither company's leadership made any moves to wave the white flag and so both companies continue to suffer. To Intel's credit, many years ago the company attempted to raise all flash prices by 15%. To AMD's discredit, they maintained their artificially low prices. Had I been running the company, I would have thanked Intel by raising our flash prices by 17 or 18% to make the NOR industry more attractive. Another major factor in Spansion's decline was the NAND flash glut. I read some iSuppli reports indicating that NAND coupled with DRAM could achieve similar performance to NOR at lower cost. iSuppli predicted that NOR would continue to lose market share for mobile phone to NAND. The mobile phone manufacturers constantly put pressure on NOR providers to lower costs. I can't understand how sales would tolerate reservation pricing 15% below cost but they seemed to do it year after year. Another report I read indicated software was a major barrier to entry for NAND. Unfortunately, I never had access to the upper echelons of sales and strategy at Spansion - I would have loved to understand the rationale for their business thinking. In the end, I believe Spansion and Numonyx have both capitulated declaring they don't want to supply mobile phone makers anymore than demanding they pay a reasonable price for these chips is mind-blowing. That is an amazing declaration! To chose to simply refuse business rather than first saying, "Hey, how about you pay cost plus some profit for these parts! Considering I've been subsidizing your profit margin by selling below my total production costs for 5 to 10 years - YOU OWE ME!" I believe the new Spansion under Kispert's leadership has made the tough, yet inevitable decisions that Management should have made many years ago. Spansion could not afford the high fixed costs of operating a R&D facility in Silicon Valley. The plan to build a tiny 300 mm factory in Japan was a total blunder. If I had been CEO, I would offered a relocation package for the R&D folks to move to Austin and I would have concentrated all production (and only profitable production there). The most dedicated could have left over-priced and bankrupt California, sold their over-priced homes in the central San Jose area, and lived like kings and queens in the low-cost, highly desirable Austin area. All effort should have been focused on exploiting the talent within FAB25 and coming up with creative solutions to boost capacity by eliminating bottlenecks in the factory. The management now has pretty much done what should have been done years ago except now they have eliminated a lot of good engineers and destroyed morale and wiped out $1.2 B in investor cash and confidence. Year after year Spansion was loved by its suppliers - it has received award after award for best supplier including perhaps ironically even several awards from Samsung's mobile phone division which one might assume would naturally favor its own internal semiconductor division. Spansion created considerable value for its customers yet continuously failed to capture that value in profits. I would have made whatever legally permitted gestures to Intel/ST Microelectronics/Numonyx to diffuse the price war and get mobile phone pricing back to reasonable levels. Market share is meaningless if it is achieved unprofitably.

They are willing to lay you off without any notice and no severance package, even violating the law. The new CEO, John Kispert, is as incompetent as he is heartless. The layoff stunt in parallel with executive pay increases was a PR nightmare that should never have happened, even just beyond the ethics. They have complete disregard for the welfare of employees. I would never recommend or work for this company again. After all, you could be next.