Flash memory maker Spansion Japan filed for protection from creditors to give it time to restructure its operations, parent company Spansion said Monday.
It's the second major event in a bid for survival on the part of the parent company. Spansion's former president and CEO Bertrand Cambou resigned last week as the company sought a possible sale or merger to raise funds to pay off the interest on debt that has come due.
Cambou had led the flash chip maker since it was formed in 2006 out of a flash memory joint venture between Advanced Micro Devices (AMD) and Fujitsu.
"Spansion Inc. does not expect the filing in Japan to materially affect its global operations," the company said Monday. "Spansion Japan Ltd. will continue its operations and intends to pay, in a timely manner, for all goods and services that it obtains after the date of filing."
The company said it is in talks with an ad hoc committee representing holders of the US$625 million in senior notes on which it recently failed to make an interest payment -- something that could send the company into bankruptcy proceedings soon.
Spansion owns advanced chip factories in Aizu-Wakamatsu, Japan, and Austin, Texas.
It stands to become the second major chip industry victim of the global economic downturn after Germany's Qimonda, which filed for bankruptcy protection last month. A memory chip glut sent prices down over a year and a half ago, sending many chip makers into the red, including flash memory companies. The economic downturn has worsened their problems by hurting demand and making loans harder to come by.
Spansion has been taking significant market share from its main rival in the NOR flash memory chip market in recent years, Jim Handy of Objective Analysis, noted in a recent report.
But a bankruptcy court would have a number of decisions to make, from leaving Spansion intact as it restructures its debt to complete liquidation, Handy said. The company's chip factories would likely not be of any interest to companies outside the flash memory industry, but Spansion's intellectual property would be easy to sell, he said.