Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Memory/Storage

Spansion/Fujitsu merger to spawn car SoCs mid-2014

Posted: 07 Feb 2014 ?? ?Print Version ?Bookmark and Share

Keywords:Spansion? Fujitsu Semiconductor? embedded flash? MCU? automotive market?

Spansion has reported that its 4Q13 revenue reached $313.7 million, a 40 percent increase from the same quarter a year ago, and up 14 percent sequentially. The company began its transformation process last summer when it subsumed Fujitsu Semiconductor's MCU and analog businesses, turning it from a flash memory specialist to a supplier of embedded systems solutions.

Calling the Fujitsu deal "a nice fit," John Kispert, CEO at Spansion, during a one-on-one interview with EE Times, remained optimistic about integrating two companies with vastly different cultures, geographical markets and product lines.

The Fujitsu Semiconductor acquisition in August is paving the way for Spansion's development of SoCs integrating Spansion's embedded flash technology with MCU, analog and power management ICs.

Spansion plans to home in on the automotive market by launching SoC products, the first fruits of the merger, in the middle of this year.

Spansion's CEO Kispert told EE Times that the company will fit the SoCs into automotive and the Internet of Things. Spansion's "ability to bring higher performance MCUs with embedded flash" is already getting "great traction" from its customers, he claimed.

Spansion's plan for melding the two companies' technologies is ambitious. It includes development of "system-level architectures" that address "complex interface, protocols and security requirements," Kispert explained. In the coming quarter, he said Spansion will accelerate the introduction of new product platforms.

Clearly, Spansion's game plan is to ride the wave for "smart and connected devices in homes, cars, buildings and on the go with wearables."

Kispert explained that all such [embedded systems] designs inevitably demand "more processing power, flash memory and power management operations to manage analog interactions with the external world." Kispert is hopeful that the market will trend in that direction and dovetail with the company's combined MCU/analog/flash strategy.

For any company, incorporating two organizations into one tends to be time-consuming and often painful. But Kispert stressed that he's happy with the progress Spansion is making with Fujitsu Semiconductor's MCU and analog businesses.

In contrast to Spansion, which had good customer bases outside Japan, Fujitsu's customer base was mostly in Japan, said the CEO. Now, MCUs and analog products suddenly have much larger markets, including Europe, China and the United States, Kispert explained.

Spansion's 4Q13 net sales

Spansion's 4Q13 net sales. (Note: Data is based on Spansion "ship to" locations.)

Spansion's 4Q13 net sales

Spansion's 4Q13 net sales.

He called Fujitsu Semiconductor's acquired groups, which include researchers and scientists, "a tremendous group."

Over the last three months, Spansion has been busy making "a bunch of changes" in product roadmaps and IP blocks that need to be worked into new platforms.

Of the people, process, real estate and IT areas where integration needs to take place, process technology is an area demanding close attention. For Spansion whose main business had been on memory products, MCU and analog processes present a big change. The new businesses require "tighter time-to-market and product life cycle management," Kispert explained.

Merging the IT systems of the two companies also has "still a long way to go," he added.

Asked if Spansion is laying off any people, the CEO said no. "I don't see it in the foreseeable future, either." Kispert made it clear that the merger is about "incorporating" the two organizations, rather than "consolidating the two."

As for real estate, the CEO said, "That's an easier part. It's a matter of moving people from one building to another." During the earnings call, Randy Furr, Spansion's CFO, noted: "In Q1, we concluded the sale of our Sunnyvale headquarters campus."

As for the Q1 forecast, Spansion estimates net sales to be "$295 million to $320 million," with the non-GAAP gross margin to be "32.5 percent to 34.5 percent." The company downplayed the flat Q1 forecast, noting that given the normal seasonality experienced in its flash business, this outlook actually reflects "the consistency and strength from the analog and microcontroller businesses," according to the CFO.

Spansion's internal fab ran at about 65 percent equipment utilization in Q4. The company expects the rate to be similar in the first quarter. While 65 percent seems like a low rate, the CFO noted, "This gives us a lot of leverage in 2H14, where we expect fab utilization to improve." The fact is that Spansion continues to work out inventory. By H2, Spansion, however, is expecting to see "a fairly decent pickup" in overall capacity utilization.

On a US GAAP basis, Spansion reported Q4 operating loss of $9.4 million and net loss of $23.7 million. The GAAP operating loss includes $5.8 million of acquisition related costs and purchase accounting inventory markup. As a result of the Fujitsu MCU and analog/mixed signal acquisition, "purchase accounting requires inventory to be written off essentially to market value," Furr explained. Therefore, until the acquired inventory flows through P&L, he cautioned, "Our GAAP gross margin will be low."

Spansion in Q4 was hit with sizeable litigation charges; as much as $13 million. Spansion had filed two separate lawsuits against Macronix for IP infringement, and Macronix filed two counter complaints.

The International Trade Commission's trial date for Spansion's case against Macronix is set for May.

For Spansion, commercializing and protecting the company's IP through licensing (and litigation) is a key pillar for its business. Other key areas include: growing the MCU business worldwide (including 8bit, 16bit and 32bit proprietary and 32bit ARM-based MCUs), expansion of its analog business across all markets and regions; growing embedded flash memory leadership position, and integrating the company's embedded flash technology into a broad range of solutions.

- Junko Yoshida
??EE Times

Article Comments - Spansion/Fujitsu merger to spawn car...
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top