Spansion passes Intel in cell-phone flash market

Spansion passes Intel in cell-phone flash market

Spansion passed Intel to become the largest seller of NOR flash memory for mobile phones, thanks to strong sales in 2006, iSuppli said.

Spansion posted a sharp rise in the number of NOR flash chips it sold to mobile phone makers in 2006, allowing the company to push Intel to second place in that market segment, according to an analyst report.

Spansion sold $US1.8 billion worth of NOR flash in that sector during 2006, increasing 35 per cent above its sales for 2005 and growing far faster than the market as a whole, which rose 16.4 per cent to $US6.1 billion, iSuppli said.

At the same time, Intel suffered from problems with production capacity, limiting its revenue growth to an increase of just 5.1 per cent, to reach $US1.6 billion, according to senior iSuppli analyst, Mark DeVoss.

Together, those factors produced a 29.9 per cent share of the global mobile phone flash market for Spansion, which had not existed as an independent company until chipmaker AMD spun it off in December 2005. The next largest supplier was Intel with 26.1 per cent share, then ST Microelectronics (15.7 per cent), Samsung Electronics (11.2) and Toshiba (6.5).

Despite the growing popularity of solid state memory in electronic devices such as digital cameras, smart phones, printers and TVs, both NOR and NAND flash memory producers are struggling to stay profitable as chip prices fall. That trend would continue in 2007, although NAND flash makers could find salvation as PC designers increasingly traded rotating disk storage for solid state memory, iSuppli said. The future still looked bleak for NOR makers which relied almost completely on wireless handset sales.

That shifting market is one reason that Spansion's big sales figures in 2006 earned it only a third-place position in the flash market as a whole, which includes global sales of both NAND and NOR flash for all applications. Spansion is also one of the few flash providers to make only NOR, buying NAND from its competitors when customers demanded mixed platforms, DeVoss said. Overall, Samsung and Toshiba continued to control the top spots in the larger market, as Intel's weak year dropped it to fifth place behind ST Microelectronics.

Spansion acknowledged that the NOR profits were vulnerable since that market had traditionally operated as a commodity industry, competing through price more than product differentiation. But the company insisted it could find a winning edge by adding extra services such as related software, hardware, packaging and third-party verification, according to a statement on its website.

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