spansion.jpgSpansion, the US-listed chipmaker, has struck a deal with Chinese chip giant Semiconductor Manufacturing International Corp (SMIC) in a bid to get closer to China's electronics industry.

Spansion was originally a JV between AMD of the US and Japan's Fujitsu before floating on Nasdaq in December 2005. It specialises in NOR flash memory chips, which are used principally for storing software programs in smartphones and other programmable devices. NAND flash, by contrast, is used for storing data in USB pen drives or music in MP3 players.

Flash memory is a cut-throat business and the pricing pressures are increasing as Chinese electronics companies make great inroads into the mobile phone and consumer electronics markets.

Spansion has thus decided to ally with SMIC to bring down costs and get closer to Chinese customers. SMIC will make Spansion's chips on 12-inch wafers, which should bring costs down. Spansion has a foundry deal with TSMC, the world's biggest foundry, but the Taiwanese rival does not have a 12-inch capability in China.

and the two have signed a preliminary memorandum of understanding that would allow SMIC to enter selected segments of the flash memory market with a license to manufacture and sell certain Spansion flash memory products for the Chinese market.

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