Spansion to sell Suzhou final manufacturing facility to Powertech

SUNNYVALE, USA: In a move designed to lower fixed costs over the long-term, enhance its manufacturing flexibility, and further its restructuring efforts, Spansion Inc. announced its wholly owned subsidiary Spansion LLC has signed a definitive agreement with Powertech Technology Inc. (PTI) to sell to PTI its final manufacturing facility located in Suzhou, China, and certain related equipment.

Under the terms of the agreement and subject to US bankruptcy court approval, PTI will pay Spansion LLC approximately $31 million in cash, subject to certain adjustments, over the six months following the closing and Spansion LLC will transfer 100 percent of its shares in its subsidiary Spansion Holdings (Singapore) Pte. Ltd., which is the holding company of the Suzhou facility.

Also following the closing, PTI will provide final manufacturing services to Spansion at the Suzhou facility pursuant to a Supply Agreement between Spansion LLC and PTI.

The planned sale is another step in Spansion's strategy to focus on its own core competencies and efficiently utilize its assets by shifting to a more variable, outsourced manufacturing model.

It also demonstrates further progress in Spansion's corporate reorganization, which is designed to create an operating model to support a leaner, more competitive company that has greater operational efficiencies and is positioned for positive free cash flow and profitability.

"As an industry-leading final assembly and test service company, we believe PTI is an ideal final manufacturing resource for Spansion," said John Kispert, Spansion President and CEO.

"Spansion is executing on our strategy to refine our business model and focus on our core competencies. We believe this agreement will help Spansion emerge from the Chapter 11 process a stronger and more focused company."

The Spansion Suzhou facility is one of four factories in Spansion's final manufacturing network, with approximately 565 employees. Operating in China since 1998, the Suzhou facility is certified to ISO 9001:2000 and ISO/TS 16949:2002 as well as ISO 14001 and OHSAS 18001 standards.

Operations at Spansion Suzhou include: multi-chip-package (MCP) development; high-volume manufacturing of MCP, FBGA, and TSOP packages; assembly, test, mark and pack; and customer support.

"We expect an uninterrupted supply of products to our customers after the transfer of ownership of the Suzhou facility," said Ajit Manocha, executive vice president, operations. "In addition, we fully expect to maintain Spansion's high quality standards for customers as we transition to becoming a customer of PTI in the future."

The transaction and its final terms are subject to US bankruptcy court approval.