Taiwan's NOR Flash Memory Makers Gain From Spansion's Phase-out

Taipei, Aug. 27, 2009 (CENS)--Macronix International Co., Ltd. and Winbond Electronics Inc. expect their production lines to be inundated with orders for NOR Flash memory chips throughout the second half this year in light of escalating supply shortage triggered by phase-out of No.1 player Spansion.

Spansion filed for bankruptcy in the first quarter this year, leaving a market where it once controlled a 39% share.

Industry watchers point out Spansion's departure has triggered supply shortage of the niche memory chips, over half of which are built into mobile phones. Worldwide market for NOR Flash memory chips for various applications generates average revenue of around US$7.6 billion a year.

Although Macronix and Winbond make NOR Flash memory chips for non-handset uses, they have received flooding orders thanks to NOR Flash players shifting profession to mobile-phone chips from consumer-electronic chips, leaving a huge shortage to be filled by chipmakers specializing in consumer-electronics chips.

On the other hand, Macronix and Winbond have begun developing chips for mobile phones. Macronix now controls only 5% of the global market, but it is the world's No.1 supplier in serial NOR Flash memory segment with a market share of 25.8%. Serial chips are mostly applied to storing firmware for hard drives, Ethernet controllers, DSL modems and wireless network devices.

Macronix executives said they are optimistic about second-half sales driven by orders losing luster to chipmakers busy dealing with orders for mobile-phone Flash chips. The company is using 0.13-micron process to make 55% of its NOR Flash chips.

Industry watchers point out that many big buyers of NOR Flash chips ignoring Macronix in the past are now welcoming the company with open arms. They believe shortage of NOR Flash chips will continue into next year.

Brisk market has inspired the company to forecast revenue for current quarter to rise 20% sequentially, with gross margin ratio projected at 40-42%. Institutional investors estimate the company's earning for this year to post at NT$1.4 per share. It registered NT$0.51 per share throughout the first half of this year.

Winbond has begun shipping NOR Flash chips to prime buyers. The company's executives recently said NOR Flash chips and some niche memory chips have become the company's major revenue drivers and the company has secured orders for at least a quarter of production. The company is using 90nm process to make the chips and plans to migrate to 65nm process next year.