Spansion cuts 3,000 employees, 35 pct of workforce

SUNNYVALE, Calif. - Troubled flash memory maker Spansion Inc. said late Monday it will slash its global work force by 35 percent, affecting about 3,000 employees, mostly at manufacturing sites.

The move comes as Spansion, one of the world's largest makers of flash memory chips used in digital cameras and other gadgets, is cutting costs amid a company-wide restructuring effort and exploring a possible sale.

"The global recession is forcing us to make this very difficult decision in order to bring our costs in line with the current expectations for significantly reduced revenues," said John Kispert, Spansion president and chief executive, in a statement.

The job cuts are expected to cost $25 million during the first half of 2009, but generate annual cash cost savings of approximately $225 million.

Sunnyvale, Calif.-based Spansion began as a joint venture between Advanced Micro Devices Inc. and Fujitsu Ltd. in 1993. Its flash memory products are integrated into a variety of electronic devices such as cell phones, high-definition TVs and set-top boxes.

In January, Spansion said it would restructure its balance sheet and seek a sale or merger. Chief Executive Bertrand Cambou was recently replaced by John Kispert, the former president of KLA-Tencor Corp. Earlier this month Spansion's Japanese unit filed for bankruptcy, and on Monday Taiwan-based ChipMOS, a provider of chip testing and assembly services, said it terminated its contract with Spansion LLC over the company's default on $29 million out of $73 million in trade debt.

Spansion shares have been steadily declining over the past three years, peaking in the mid-double-digit range in 2006 but falling to $3.70 by last spring. As the recession has reduced consumer demand for the electronics which use Spansion's chips, the stock has tumbled further, closing Monday at 5 cents.

The news comes the same day that fellow chip maker Micron Technology announced it will slash as many as 2,000 workers by the end of August and phase out certain manufacturing operations at its Boise, Idaho facility, amid the weak economy and lower demand for its DRAM memory chips.

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