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Spansion Fires A Salvo Amid Memory Slump

Posted by: Aaron Ricadela on November 17, 2008

Amid a memory chip market decimated by competition and plunging prices, flash memory maker Spansion is trying to remodel itself as a technology licensing company. It announced its intention with fireworks on Monday, filing twin patent infringement lawsuits against South Korea’s Samsung.

Spansion is suing Samsung Electronics and its subsidiaries for infringing what it says are 10 flash-memory patents. It’s seeking billions of dollars in damages and trying to bar companies including Apple, Research In Motion, and Sony from importing millions of gadgets that use Samsung chips that Spansion says illegally employ its technology. Spansion filed the suits Nov. 17 with the U.S. International Trade Commission in Washington, D.C., and a in federal court in Delaware.

“Samsung has been using our patents for everything they do,” says Spansion CEO Bertrand Cambou. Cambou says Samsung has also created new patents that cite Spansion’s as prior art, which he says strengthens his company’s case. Cambou won’t disclose the damages his company seeks, as it tries to bring Samsung to the table to negotiate a licensing agreement. But he says they’re in the “billions” of dollars, and a Spansion press release says the infringing technology has accounted for more than $30 billion of Samsung’s revenues the past five years. “We’re hoping to get a settlement with Samsung,” says Cambou.

The ITC complaint seeks an injunction against imports to the U.S. of products containing chips that use the technology Spansion is asserting patents on, including Apple’s iPod and MacBook Air, and Research In Motion’s BlackBerry communicator. Spansion says it’s the world’s third-largest flash memory supplier, after Samsung and Japan’s Toshiba.

A spokeswoman from Samsung Semiconductor in San Jose, Calif., declined to comment on the lawsuit. Samsung dropped a $26-per-share offer to buy flash memory maker SanDisk in October.

Spansion, the result of a prior joint venture between Advanced Micro Devices and Fujitsu, has been losing money, and its stock closed Nov. 17 up 16 cents, at 50 cents. The Sunnyvale, Calif.-based company’s market value has fallen to about $80.5 million. Flash memory chips lets devices like cell phones, digital cameras, and digital music players retain data even after they’re switched off. But it’s been a tough year for memory chips, as prices of that silicon used in PCs and digital cameras have plunged.

Spansion is seeking to transform itself from a manufacturer of flash memory chips into an intellectual property and licensing company, and its acquisition this year of Israel’s Saifun Semiconductors enlarges its portfolio of patents, says Cambou. “Obviously the current business environment is very bad,” he adds.

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Reader Comments

Santosh Yachareni

November 18, 2008 01:52 AM

Saifun Semi was a Israel company, not S. Korea.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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